mergers & acquisitions in the engineering & construction sector

June 13, 2016

Mergers & Acquisitions in the

Engineering & Construction

Sector

Strictly Private & Confidential

Private and Confidential | 2

Table of Contents

I. Macro-Economic & Industry Overview

II. Mergers & Acquisitions Overview

III. Additional Perspectives

Appendix

A. D.A. Davidson Overview


Macro-Economic & Industry Overview

Section I


-

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Comments

U.S. Macro-Economic Overview

Sources: Capital IQ, U.S. Bureau of Labor Statistics.

Gross Domestic Product Annual Growth

U.S Unemployment Rate

The U.S. economy remains a relative bright spot amongst the

global malaise impacting other large economies

GDP growth solidly positive for last six years with similar

expectations for 2016

Employment rolls have increased steadily and unemployment

is approaching pre-recession levels

Apart from significant dislocation in the energy markets, major

sectors of the U.S. economy (healthcare, technology, financial

services, consumer-oriented) are healthy and have experienced

solid revenue and profit growth

Stock market returns in 2016 have been extraordinarily volatile,

shaken by China’s deceleration and other global macroeconomic

trends. However, fundamentals remain consistent with the generally

accepted 2015 outlook and markets have trended positive after a

rough start in January / February

M&A activity achieved record levels in 2015 across the broad U.S.

economy. Acquisitions represent a significant driver of corporate

earnings growth in recent years and the pace is slated to continue

Middle market, private company transaction activity reflects broader

economic themes as well as sector- and company-specific investor

beliefs. Activity was broad and robust in 2015; 2016 is off to a

strong start

6.7%5.8%

4.5%

1.7%

(2.0%)

3.8% 3.7%4.1%

3.1%

4.1%3.5%

(4.0%)

(2.0%)

-

2.0%

4.0%

6.0%

8.0%

10.0%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015


Comments

E&C Macro-Economic Overview

Sources: Capital IQ, Census Bureau.

Historic U.S. Non-Residential & Public Construction Spending

Percent Change in Non-Residential Construction Put in Place

Overall construction growth has continued in 2016 after a brisk

increase in 2015. Anecdotally, contractors report strong backlog

levels and continued expectations of robust building levels across

most major general building sectors.

Builder confidence levels have cooled in recent

quarters though remain positive

Popular indicators, including the ABI, Builders Confidence, and

backlog surveys continue to trend positively, albeit at a somewhat

slower pace

Civil construction demand appears to be reviving. Recent surveys

suggest improved work bookings for public contractors with much of

the gain apparently driven by transportation projects

Oil and gas producers have sharply curtailed capital spending

plans, including an expected 25% cut in 2016 following a 35%

reduction in 2015.

However, the reduction in upstream production is

contrasted with robust demand in midstream and

downstream infrastructure.

Transportation (pipeline) and storage facilities require

upgrade and expansion; new chemical plants, gas fired

power, and export facilities are in development

Home building recovery continued in Q1 2016. Residential

construction grew in 2015 at a 6% annual rate. Multi-family also

remains strong, though is cooling (40%)

(30%)

(20%)

(10%)

-

10%

20%

30%

40%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

$ 500,000

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

Private Non Res Public

*Dashed lines represent pre-recession peak volume levels


Non-Residential Construction Indicators and Data

Builder Confidence

Construction Backlog Indicator by Industry Construction Backlog Indicator

-

10

20

30

40

50

60

70

80

90

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

2009 2010 2011 2012 2013 2014 2015

Sources: Capital IQ, Census Bureau, and ENR.

-

1

2

3

4

5

6

7

8

9

10

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

2009 2010 2011 2012 2013 2014 2015

Mo

nth

s o

f B

aclo

g

-

2

4

6

8

10

12

14

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

2009 2010 2011 2012 2013 2014 2015

Mo

nth

s o

f B

acklo

g

Commercial Industrial Heavy Industrial Infrastructure


Non-Residential Construction Indicators and Data Dodge Momentum Index Architectural Billings Index

ISM Manufacturing Index

-

50

100

150

200

250

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

30

35

40

45

50

55

60

65

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

30

35

40

45

50

55

60

65

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Sources: The American Bureau of Architects, McGraw Hill Construction, and Institute for Supply Management.


-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,00019

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

20

06

20

08

20

10

20

12

20

14

20

16

Highway & Transportation Spending Data

ISTA

Signed 12/18/1991

TEA - 21

Signed 06/09/1998

SAFETEA-LU

Signed 08/10/2005

Fast Act

Signed 12/04/2015

Highway and Transportation Construction Spending

Sources: Census Bureau and D.A. Davidson estimates.


-

10

20

30

40

50

60

70

May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16

-

20

40

60

80

100

120

140

160

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Energy & Power Market Indicators and Data

Crude Oil ($ / barrel)

Source: Capital IQ.



North American Oil & Gas Capital Expenditures

North American Downstream Expenditures

($ in millions)

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

$ 450,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016E

Downtstream & Other Exploration & Production

-

20,000

40,000

60,000

80,000

100,000

$ 120,000

2004 2005 2006 2007 2008 2009 2010 20$11 2012 2013 2014 2015 2016E

Pipelines Miscellaneous & Other Refining

Petrochemicals Other transportation

Source: Oil & Gas Journal.



North American Capital Expenditures - Refining North American Capital Expenditures - Pipeline

North American Capital Expenditures - Petrochemicals North American Capital Expenditures - Other Transportation

($ in millions)

-

5,000

10,000

15,000

20,000

25,000

30,000

$ 35,000

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

$ 20,000

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

$ 10,000

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

$ 4,500

Source: Oil & Gas Journal.


Engineering & Construction Public Company Indicators

Backlog ($ bn)

EBITDA ($ bn)

-

50

100

150

200

$ 250

2010 2011 2012 2013 2014 2015E 2016E 2017E

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

$ 8,000

2010 2011 2012 2013 2014 2015

($ in millions)

Sources: Capital IQ and Equity Research.


-

2

4

6

8

10

12

14x

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

D.A. Davidson Engineering & Construction Current Valuation – Forward EV / EBITDA

Source: Capital IQ.

Engineering & Construction Public Company Valuation


9.1x

11.2x

-

2.0

4.0

6.0

8.0

10.0

12.0x

2011 2012 2013 2014 2015 2016

E&C Index S&P 500 Index

4.8x

6.0x

8.5x

9.5x

10.2x

12.9x

11.2x

- 4.0x 8.0x 12.0x 16.0x

O&G

Diversified

Utility

Civil

Building

Environmental

S&P 500 Index

Public Markets – Engineering & Construction Trading Statistics (EV / EBITDA)

5 Year Max & Min 3 Year Median 5 Year Median Current

S&P 500 Index

7.5x 11.2x 10.1x 9.6x

Civil

3.9x 11.6x 9.3x 7.7x

Diversified

4.8x 10.2x 6.0x 7.9x

Source: Capital IQ.

Note: As of 5/23/2016. Environmental includes Aecom, Tetra Tech, Layne Christensen, and Stantec. Civil includes Aegion, Great Lakes D&D, Granite, Layne Christensen, Matrix Services, Orion Marine, Tutor Perini, Primoris, and Sterling.

Utility includes Dycom, MasTec, Matrix Services, MYR Group, Primoris, Quanta Services, and Willbros. Building includes Comfort Systems, EMCOR, and Tutor Perini. Diversified includes Chicago Bridge & Iron, Fluor, Jacobs, and KBR.

Oil & Gas includes Chicago Bridge & Iron, Fluor, KBR, McDermott, and Willbros.

Utility

5.9x 9.7x 8.3x 7.9x 8.5x

Environmental

S&P 500 Index

Building

Civil

Utility

Diversified

Oil & Gas

Environmental

6.1x 13.6x 11.5x 9.6x 12.9x

Building

7.8x 4.5x 10.2x 8.3x

Oil & Gas

4.4x 10.5x 7.7x 7.6x 4.8x

Trailing EV / EBITDA Multiples Over Time

Current EV / LTM EBITDA

10.3x

7.3x

9.5x

To be Updated


Factor Mid 1990s

- 2000

2000 –

2002

2002 –

2007

2008 –

2010

2011 -

2013

2014 –

2015 2016

Economic Environment

Stock Market Performance /

Credit Market Strength

Investor Confidence /

CEO Confidence /

Bankruptcies / Restructuring

/ Corporate Scandals

Geopolitical Situation

Political Landscape

Shareholder Activism

Valuation

Factors Affecting the M&A Environment


Mergers & Acquisitions Overview

Section II


U.S. Private Equity Exit Activity

Middle Market M&A Summary

Source: CapitalIQ, Pitchbook

Middle Market M&A by Industry Middle Market M&A Transactions

Add-Ons as a % of Overall Private Equity Transactions

$34.4

$42.6

$39.1

$50.8

$29.0

$37.9

$45.0

$52.6

$40.0

$52.3

$37.4

$34.7

$25.0

$25.6

$34.6

$33.4

$27.1

461

541588

678

438

513

655680

567

680

365

337

283312

347 338

301

-

100

200

300

400

500

600

700

-

10

20

30

40

50

$ 60

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

2012 2013 2014 2015 '16

Volume Deal Count

$2.7

$7.3

$2.4

$3.2

$4.7

$3.7

$7.6

$1.3

$5.1$4.6

$0.4

$4.6

$2.7$3.1

$5.1

$1.5

-

1

2

3

4

5

6

7

8

$ 9

Industrials& Materials

Consumer Energy &Utilities

Financials Healthcare Real Estate Technology& Telecom

Other

Q1 2015 Q1 2016

1,0

16

1,2

43

1,3

64

1,3

14

1,7

06

1,7

52

983 9

78

1,1

38

914 1,1

20

1,1

0051%

56% 55%59% 60% 61%

-

10%

20%

30%

40%

50%

60%

70%

80%

-

500

1,000

1,500

2,000

2,500

3,000

2010 2011 2012 2013 2014 2015

Add-On Non Add-On Add-On %

550

666

430

241

589648

834

747

979 962

-

20

40

60

80

100

120

$ 140

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Total Capital Exited Number of Exits


-

20

40

60

80

100

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1

2008 2009 2010 2011 2012 2013 2014 2015 '16

E&C Const. Mats.

Engineering & Construction Transaction Activity

-

5%

10%

15%

20%

25%

30%

-

2

4

6

8

10

12

14

16

18

20

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1

2008 2009 2010 2011 2012 2013 2014 2015 '16

# Deals % PEG

E&C Private Equity Activity Overall E&C Transaction Activity

Source: Capital IQ.


Market Valuation by End-Market (2010 vs. 2016)

2016 2010

Environmental

Telecommunications

Oil & Gas

Industrial

Facilities

Commercial

General

Buildings

Water &

Water

Resources

Government

Service

Utility &

Infrastructure

Transportation

Environmental

Telecommunications

Upstream

Oil & Gas

Industrial

Facilities

Commercial

General

Buildings

Water &

Water

Resources

Government

Service

Utility &

Infrastructure

Transportation

Midstream

Oil & Gas Va

lua

tio

n

High

Low High Perceived Risk

High

Low High Perceived Risk

Va

lua

tio

n

Construction

Materials

Construction

Materials Construction

Materials


E&C Industry Transactions: Current Market Themes

Mega-transactions have largely slowed; more normal “middle market” activity

underway

Longer-term consolidation trends remain underway

Market fundamentals support consolidation, to a point

Strong demographic need for transition by current business owners

Continued international interest

Large civil / P-3 continues to be the focus

Perhaps to a lesser extent large market “trophy” opportunities

Oil & gas / energy market downdraft

Over-reactions on valuation in selected, more stable market segments

Industrial services remains of strong interest

Bankruptcy and restructurings only now accelerating

Outlook for production-based businesses is extremely geographically dependent

Alternative energy (esp. solar) generating extremely active project opportunities


E&C Industry Transactions: Current Market Themes

Professional services attracting strong interest

Engineering, design, test, inspection

Regulatory- / compliance-oriented business models perceived to have greater stability

and higher value

Private equity market participation

Remain focused on niche providers with no bonding, high growth potential,

sustainable cash flows at attractive margins, and little project-based risk

Perceived attractive valuations [esp. relative to other industries]

Sensitive to the broader economic / industry cyclicality

Public Markets

SPACs re-appearing; consistent with previous market crest

Increased valuations available for those that qualify

Corporate activism continued break-up and divestiture activity


($ in millions) Enterprise Value

Date Acquirer Target Enterprise Value EBITDA

03/29/16 $ 793 9.5x

03/23/16 70 8.5

11/12/15 406 NA

10/14/15 126 8.2

10/03/15 130 8.8

08/25/15 310 8.9

08/14/15 375 12.0

07/01/15 NA 11.0

09/03/14 1,243 8.8

08/07/14 243 8.3

07/31/14 451 12.9

07/13/14 5,584 7.3

06/23/14 1,695 13.7

03/12/14 329 8.3

01/13/14 2,816 9.6

09/08/13 1,100 7.2

07/30/12 1,910 7.0

All dates $ 1,099 8.8x

Median 07/30/12 - 09/03/14 1,708 8.3

07/01/15 - Present 316 8.9

E&C Notable Transactions

Source: Capital IQ, Davidson estimates.


Ann. Txn.

Date Target Buyer Value

Specialty Trade

1/4/2016 Petrin Corp. & Scaffolding Rental Erection Services Brown & Root Industrial Services LLC NA

12/21/2015 Environmental Air Systems, Inc. Comfort Systems USA Inc. NA

11/20/2015 Shanahan Mechanical & Electrical, Inc. IES Holdings, Inc. NA

10/16/2015 The Corcoran Company, Inc. Spacecon Specialty Contractors LLC NA

6/30/2015 HVACRedu Inc. Comfort Systems USA Inc. NA

5/1/2015 Signature Landscape Services, Inc. One Rock Capital Partners, LLC NA

2/28/2015 Schultz Mechanical Contractors, Inc. Aegion Corporation $ 8

2/15/2015 GeoDynamics, Corp. Nilex Inc. NA

8/21/2014 Place-Crete Systems Inc. Mosaic Capital Corporation 21

4/7/2014 DynaTen Corporation Comfort Systems USA Inc. 42

2/19/2014 Pike Corporation Court Square Capital Partners L.P. 584

1/28/2014 Kirlin Group, LLC And National Fire Protection LLC Oaktree Capital Management, L.P. NA

1/2/2014 EMCOR Energy Services, Inc. TRC Companies Inc. 1

11/2/2011 Environmental Air Systems, Inc. Comfort Systems USA Inc. 50

Average: $ 150

Utility / Power / Industrial

5/4/2016 ParFab Industries Trive Capital NA

06/02/2016 Goodman Networks Inc., Certain Assets Dycom Industries Inc. $ 108

3/31/2016 American Scaffold Inc. J.F. Lehman & Company NA

3/31/2016 Colorado Scaffolding & Equipment Co Inc. C&D Insulation, Inc. NA

1/7/2016 Cortel Inc. and TowerCom Technologies LLC Ridgemont Equity Partners NA

12/04/2015 Stork Holding B.V. Fluor Corporation 754

11/6/2015 The MCC Group, L.L.C. Bernhard Capital Partners NA

11/01/2015 Furmanite Corporation Team, Inc. 313

10/27/2015 CB&I Stone & Webster, Inc. Westinghouse Electric Company LLC 229

8/27/2015 Mobley Industrial Services, Inc. Safway Group Holding LLC NA

8/25/2015 Olsson Industrial Electric, Inc. NAES Corporation NA

8/7/2015 TelCom Construction Inc. Dycom Industries Inc. 49

7/25/2015 Moll's Utility Services, LLC Dycom Industries Inc. 7

7/13/2015 Hoffman Southwest Corp. Sterling Partners NA

6/30/2015 Qualspec Inc. Team, Inc. 265

6/11/2015 GED Integrated Solutions, Inc. Altus Capital Partners NA

5/6/2015 A & B Trenching Co., Inc. Miller Pipeline, LLC NA

4/13/2015 E.S. Boulos Company, Inc. MYR Group, Inc. 11

3/31/2015 Premier Utility Services, LLC USIC Locating Services, LLC 51

2/3/2015 Greenberry Industrial LLC NAES Corporation NA

1/8/2015 North American Substation Services, LLC Industrial Growth Partners NA

12/31/2014 Avenia, Inc. Primoris Services Corporation 22

12/11/2014 Swaggart Brothers Inc. Wood Group PSN, Inc. 36

11/21/2014 Banister Pipelines Constructors Corp. Quanta Services, Inc. NA

10/23/2014 Mountain Valley Pipeline, LLC EQT Midstream Partners, LP 99

10/3/2014 Stark Sandblasting & Painting Company Apache Industrial Services, Inc. NA

9/2/2014 Brigadier Pipelines Inc. & The Link-Line Group Southwest Gas Corporation 185

Ann. Txn.


General Building

6/30/2015 The Dennis Group Andrade Gutierrez NA

6/9/2015 Assets of dck Pacific Guam, LLC Pernix Guam, LLC $ 2

6/4/2015 BE&K Building Group, LLC Pernix Building Group, LLC 22

4/1/2015 C.W. Brown Inc. LeChase Construction Services, LLC NA

10/16/2014 Tessada & Associates, Inc. Fort Sill Apache Industries, LLC NA

7/31/2014 Banker Steel Company, LLC Turnspire Capital Partners NA

7/29/2014 Hunt Construction Group, Inc. AECOM NA

6/17/2014 Moss & Associates, Inc. Hunt Building Company, Ltd. NA

1/23/2014 TRICORP HEARN Construction American Colonial Capital, LLC NA

1/10/2014 Rentenbach Constructors Incorporated The Christman Company Inc. NA

12/18/2013 Plaza Construction Corporation China Construction America, Inc. NA

5/14/2008 RJM Construction, Inc. NorthMarq Cos NA

Average: $ 12

Heavy Civil

3/16/2016 Leidos Constructors LLC The Haskell Company NA

03/07/2016 Lithko Contracting, Inc. The Pritzker Organization NA

12/31/2015 Slayden Constructors, Inc MWH Constructors, Inc. NA

11/11/2015 Lane Industries Incorporated Salini Impregilo S.p.A. $ 406

10/16/2015 AUC Group, L.P. Argosy Capital NA

8/5/2015 T.A.S. Concrete Construction, LLC Orion Group Holdings, Inc. 143

5/20/2015 Layne Christensen, Geoconstruction Business Keller Foundations Ltd. 48

12/31/2014 Foley Company Enerfab, Inc. 12

11/3/2014 Magnus Pacific Corporation Great Lakes Dredge & Dock 76

9/1/2014 Broda Construction Ltd. TriWest Capital Partners 36

8/19/2014 Brundage-Bone Concrete Pumping, Inc. Peninsula Pacific Strategic Partners LLC 171

8/10/2014 J. F. White Contracting Company, Inc. Dragados NA

6/26/2014 Facchina Construction Company, Inc. Empresas ICA 100

4/24/2014 NorthStar Group Holdings, LLC Northstar Group Services, Inc. NA

4/22/2014 Prince Contracting, LLC Dragados Construction USA, Inc. 18

1/29/2014 Southland Concrete, Inc. HITT Contracting Inc. 5

1/2/2014 Griffin Dewatering Corporation The CapStreet Group, LLC NA

Average: $ 102

Specialty Trade

4/27/2016 STR Mechanical, Inc. IES Commercial & Industrial, LLC NA

4/5/2016 Newcomb and Company EMCOR Group Inc. NA

3/23/2016 Limbach Facility Services LLC 1347 Capital Corp. $ 70

3/21/2016 Ardent Services & Rabalais Constructors EMCOR Group Inc. 205

3/7/2016 Service Experts LLC EnerCare Solutions Inc. 341

2/2/2016 ShoffnerKalthoff Family of Companies Comfort Systems USA Inc. 175

1/12/2016 Summit Mechanical Harris Contracting Company NA

1/8/2016 WB Construction, LLC Strathklyde, LLC NA

01/06/2016 Source Refrigeration & HVAC, Inc. Audax Group, Inc. NA

(1) Since 01/01/14 unless otherwise noted.

Source: Capital IQ.

Recent(1)

E&C Transactions by Sub-Sector


Ann. Txn.


Construction Materials

10/21/2014 New York Sand & Stone, LLC Eastern Concrete Materials, Inc. NA

10/9/2014 Colorado County Sand & Gravel Summit Materials, LLC NA

9/11/2014 Metro Ready Mix Concrete, Inc. Smyrna Ready Mix, LLC NA

9/4/2014 Mainland Sand and Gravel Ltd. Summit Materials, LLC NA

8/25/2014 City Concrete, Inc. and Pitts Ready Mix Ingram Concrete LLC NA

4/2/2014 Hunt Martin Materials, LLC Martin Marietta Materials, Inc. NA

3/31/2014 Troy Vines, Inc. Summit Materials, LLC NA

3/31/2014 National East Ready Mix Corporation Innocon, Inc. NA

11/18/2013 Turner Gravel, Selected Assets CRH plc NA

7/3/2013 Rogers Group, Inc., Asphalt plants and quarries CRH plc NA

Average: $ 118

Engineering

06/02/2016 Ascension Group Architects Environments for Health Architecture NA

05/18/2016 Wyle Inc. KBR Holdings, LLC $ 585

05/04/2016 Stevenson & Associates, Inc. JENSEN HUGHES, Inc. NA

2/26/2016 Genesys Engineering, P.C. Willdan Energy Solutions, Inc. 13

3/29/2016 MWH Global, Inc. Stantec Inc. 793

2/11/2016 VOA Associates Incorporated Stantec Inc. NA

12/7/2015 Jensen Hughes, Inc. Gryphon Investors NA

12/7/2015 J. L. Patterson & Associates, Inc. Jacobs Engineering Group Inc. NA

11/13/2015 ATC Group Services, LLC Bernhard Capital Partners 63

11/05/2015 KBR, Inc., Infrastructure Americas Division Stantec Inc. 19

10/14/2015 Coffey International Limited Tetra Tech, Inc. 126

10/14/2015 Professional Service Industries, Inc. Intertek Group plc 330

10/03/2015 Willbros, Professional Services Segment TRC Solutions, Inc. 130

9/8/2015 Weidlinger Associates, Inc. Thornton Tomasetti, Inc. NA

8/28/2015 Va Consulting, Inc. Stantec Inc. NA

8/27/2015 Fay, Spofford & Thorndike, Inc. Stantec Consulting Services, Inc. NA

8/25/2015 MMM Group Limited WSP Global Inc. 310

8/14/2015 Trinity Consultants, Inc. Levine Leichtman Capital Partners NA

7/1/2015 The RBA Group, Inc. NV5 Holdings, Inc. 17

7/1/2015 EN Engineering, LLC General Atlantic LLC NA

6/15/2015 ERM OMERS Private Equity 1,700

5/5/2015 Erin Engineering And Research, Inc Jensen Hughes, Inc. 28

4/1/2015 LTC Engineering Associates, Inc. CACI International Inc. 16

3/16/2015 IBA Holdings, LLC Cortec NA

3/1/2015 Scitor Holdings, Inc. Science Applications International 961

2/11/2015 Klotz Associates, Inc. RPS Group plc 24

10/1/2014 Houston Offshore Engineering LLC WS Atkins plc 73

9/3/2014 Parsons Brinckerhoff Group Inc. WSP Global Inc. 1,243

8/26/2014 UELS, LLC Norwest Equity Partners NA

8/7/2014 Clean Earth Holdings, Inc. Compass Diversified Holdings 243

7/31/2014 Hyder Consulting PLC ARCADIS NV 451

Ann. Txn.


Utility / Power / Industrial

7/31/2014 Taggart Global, LLC DRA Group (Pty) Ltd. NA

7/10/2014 New England Scaffolding, Inc. Odyssey Investment Partners NA

6/27/2014 Pacer Corporation Group of Companies MasTec, Inc. $ 213

6/5/2014 Track Utilities, Inc. CIVC Partners, L.P. NA

5/13/2014 Clayburn Services Thorpe Specialty Services Corporation 13

5/1/2014 Manhattan Pipeline, LLC Manhattan Construction Group, Inc. NA

4/14/2014 SPEED Wire Inc. MasTec, Inc. NA

Average: $ 157

Construction Materials

4/15/2016 United States Pipe and Foundry Company Forterra Building Products NA

3/15/2016 Colorado Precast Concrete, Inc. Oldcastle Precast, Inc. NA

2/29/2016 Greco Bros. Ready Mix Concrete Co., Inc. Ferrara Brothers Building Materials NA

02/23/2016 Boxley Materials Company, Inc. Summit Materials, Inc. NA

2/8/2016 Edwards Contracting, Inc. Redings Gravel & Excavating Co., Inc. NA

2/5/2016 American Materials Company, LLC Summit Materials, Inc. NA

2/5/2016 Rocky Mountain Materials & Asphalt, Inc. Martin Marietta Materials, Inc. NA

1/5/2016 Gypsum Supply Co., Inc. GMS Inc. NA

12/22/2015 Performance Technologies, L.L.C. Superior Silica Sands LLC NA

12/03/2015 The Infinity Group Wood Group PSN, Inc. $ 192

11/13/2015 Front Range Aggregates LLC Martin Marietta Materials, Inc. NA

10/27/2015 Heavy Materials & Spartan Concrete Products U.S. Concrete, Inc. NA

10/8/2015 Wilkinson Construction Company, Inc. Geneva Rock Products, Inc. NA

10/1/2015 Cretex Concrete Products North, Inc. Hanson Pipe & Precast LLC NA

10/1/2015 Peoples Complete Building Center & Ready Mix Alexander Lumber Co. NA

09/24/2015 The Wantage Stone U.S. Concrete, Inc. 18

8/28/2015 Pitts Sand & Gravel, Inc., Select Assets U.S. Concrete, Inc. NA

8/28/2015 E&A Materials, Inc., Select Assets U.S. Concrete, Inc. NA

8/24/2015 Le Grand Johnson Construction Co. Summit Materials, Inc. 45

6/30/2015 Martin Marietta Materials, Inc., California Assets CalPortland Company, Inc. 420

6/30/2015 New Mexico & California Assets & Operations Vulcan Materials Company 21

4/24/2015 Oldcastle Surfaces, Inc. Seven Stone Surface Fabrication 8

6/8/2015 Anchor Block Company Oldcastle Architectural, Inc. 56

6/8/2015 Rock Ridge Stone Inc. Salt Creek Capital II, LLC NA

5/22/2015 Colonial Concrete Company, Inc. U.S. Concrete, Inc. NA

5/8/2015 Coastal Concrete Southeast II LLC Thomas Concrete Group AB NA

4/30/2015 A Leading Cement Terminal in Puerto Rico Cementos Argos S.A. 34

04/22/2015 Holcim Ltd., Cement Facilities in USA ESSROC Cement Corp. NA

4/16/2015 Lafarge North America Inc., Cement Assets Continental Cement Company, LLC 450

3/3/2015 Holcim (US) Inc., Slag Grinding Plant Eagle Materials Inc. 30

2/18/2015 Maryland Materials, Inc. Bluegrass Materials Company, LLC NA

2/2/2015 Nashville, Tennessee and Huntsville Operations Sims-Lohman, Inc NA

12/5/2014 Scofield Construction Services, LLC Redi-Mix, L.P. 25

10/31/2014 Damron Sand & Gravel, Inc. PB Materials Holdings, Inc. NA

Recent(1)



Source: Capital IQ.


Ann. Txn.


Engineering

7/11/2014 URS Corporation AECOM $ 5,584

7/8/2014 Hood Group of Companies The Kleinfelder Group, Inc. NA

6/23/2014 Kentz Corporation Ltd SNC-Lavalin Group Inc. 1,695

6/2/2014 The Rja Group, Inc. Jensen Hughes, Inc. NA

5/14/2014 Burns & Roe Enterprises Inc. POWER Engineers, Inc. NA

5/8/2014 Desert NDT, LLC ShawCor Ltd. 256

5/7/2014 USKH, Inc. Stantec Inc. NA

5/6/2014 SHW Group, LLP Stantec Inc. NA

4/23/2014 JBR Environmental Consultants, Inc. Stantec Inc. NA

4/18/2014 Secure Mission Solutions, Inc. Parsons Corporation NA

4/9/2014 Clear Environmental Consultants Limited RPS Group plc 10

2/28/2014 Tera Environmental Consultants Ltd. CH2M HILL Companies, Ltd. 120

2/28/2014 Surveying And Mapping, LLC Austin Ventures NA

2/5/2014 The Focus Corporation Ltd. WSP Global Inc. 329

1/30/2014 Commonwealth Engineering & Construction Zachry Engineering Corporation NA

1/13/2014 Foster Wheeler AG AMEC 2,752

1/2/2014 Stoller Newport News Nuclear, Inc. Huntington Ingalls Industries, Inc. 54

Average: $ 664

Recent(1)



Source: Capital IQ.


Sources: Capital IQ, equity research, public filings, and Davidson estimates.

Investor

Ann

Date Target

Deal

Value

EV /

Comments Rev. EBITDA

12/07/2015 NA NAx NAx

Jensen Hughes provides fire protection engineering

consulting services

Previously a platform investment with Huron Capital

Partners Latest Fund: $ 515mm

11/13/2015

$ 63 0.5x 8.8x

ATC provides environmental services

Formerly a division within Cardno

11/06/2015

NA NAx NAx

MCC provides electrical construction services

Southeast focused

BCP Energy Services

Fund: $ 600 mm 07/06/2015

NA NAx NAx

Epic Piping offers pipe fabrication services

Formerly part of KBR

10/14/2015 $ 330 1.3x 8.3x

PSI provides consulting engineering and testing

services

Sold by Olympus Partners

08/14/2015 375 NAx 12.0x

Trinity Consultants, Inc. is an environmental

consulting company that specializes in industrial air

quality issues

Previous owners include Gryphon Investors and

Sentinel Capital Partners LLCP V: $ 1.7bn

07/01/2015 NA NAx 11.0x

EN Engineering provides engineering, consulting,

and automation services

Sold by CIVC Partners and previously owned by

Clearview Capital

CIVC and management retained a equity stake in

the company Latest Fund: $ 930 mm

Significant PEG Activity ($ in millions)


Significant PEG Activity ($ in millions)

Investor

Ann

Date Target

Deal

Value

EV /

Comments Rev. EBITDA

06/15/2015 $ 1,700 1.8x NAx

ERM provides environmental consulting services

Previous owners include Charterhouse Capital and

Bridgepoint Advisors

AUM: $ 3bn

05/27/2015 300 NAx NAx

CH2M provides professional engineering services

Apollo bought a minority stake in the company

Invested $ 200mm of convertible preferred stock in

CH2M

An additional $ 100mm will occur within the one-

year period

Apollo Investment Fund

VIII: $ 18.4bn

03/16/2015 NA NAx NAx

Vidaris provides building / construction consulting

services

Formerly owned by Keystone Capital

08/26/2014 175 NAx 8.6x

UELS provides land surveying and civil engineering

services

Previous owners include Moelis Capital Partners

and APCO Capital NEP X: $ 1.6bn

02/19/2014 584 0.7x 8.4x

Pike Corporation provides construction and

engineering services

Court Square partnered with CEO, Eric Pike, to take

the public company private

Court Street Capital

Partners III: $ 3.1bn

Sources: Capital IQ, equity research, public filings, and Davidson estimates.


Additional Perspectives

Section III


Value Drivers in the Construction Industry

Size and scale

Geographic diversity

Customer concentration

Project risk

End markets served

Consistency of profits

Barriers to entry

Overall growth characteristics

Complexity of work

Quality and ongoing commitment

of management

Recurring revenue component

(MSA, service work, repeat

customers)

Methods of work procurement (e.g.

negotiated vs. bid)

Nature of work delivery and

method (e.g. design-build vs.

design-bid-build, etc.)

Access to capital

Amount of bonded work

Prime vs. sub-contracted revenue

mix

Consistent and disciplined

approach to processes for

managing work

Level of self-performed work

Based on Davidsons’s analysis

of the publicly- traded universe

of E&C firms and the M&A

situations we are routinely

involved with, we have

identified the following factors

as having significant impacts

on valuation for Engineering

and Construction firms


Potential Ownership Transfer Alternatives

Status Quo

Outright Sale to 3rd party

Partial / Full Sale to ESOP

Private Equity Financed

Growth and Ownership

Transition

Partial / Full Internal Buyout

Public Offering


Qualitative Assessment of Alternatives

Alternatives

Objectives

Partial / Full

Internal Buyout

Partial / Full

Sale to ESOP

PE Fin.

Growth Outright Sale Public Offering

Achieve fair value for shareholders P P P P P

Facilitate rapid internal transfer of

shares for next generation of

management X P/ ? P / ? X X

Maintain unique Company culture P P ? X ? / X

Provide path to liquidity for

significant owners P P P P P

Provide ongoing access to capital

for investment and growth ? / X ? / X P ? P

Availability of alternative to

transitioning owner(s) Requires individual company analysis


Typical Deal Team Configuration

Owners Management Lawyers Accountants Investment

Bankers Specialty

Shareholders

active in

business

Incentivized

to close a

deal

Looking to

exit or find a

partner

President

CFO

COO

Important to

the

marketing

process

Some

ownership

Leader

Quarterback

Associate

Partner

Associate

Tax

QoE

Working

capital true-

up

Managing

Director

Vice

President

Associate

Analyst

Virtual data

room

HR

Environment-

al

Insurance

IP

Tax

Regulatory


Sell-side due diligence could increase the buyer's trust level and willingness to pay top dollar

An investment in professional pre-sale due diligence will produce accurate financial information for

the buyer and also address operational, technology and human resource issues

Could be the difference between a successful sale and a long, potentially contentious

transaction process

The proposal timeline will ensure a highly competitive and efficient process

Sell-Side Quality of Earnings Study

Improves the accuracy of the historical and projected financial

information contained in the marketing materials

Provides the buyer with a transparent, objective and credible

view of the business

Minimizes surprises and maximizes transaction value by

adding credibility and objectivity to the process

Identifies adjustments that positively impact EBITDA

Augments the Company’s internal management resources

with experienced accounting and finance partner resources

Increases competition between buyers and minimizes buyer

negotiations after the letter of intent

Value-added step to ensure the best risk-adjusted outcome

Benefits of Sell-Side Due Diligence


D.A. Davidson Overview

Appendix A


Introduction to D.A. Davidson Companies

Investment Banking

Equity Research

Institutional Sales &

Trading

Corporate Services

Public Finance

Institutional Sales &

Trading

Fixed Income Strategy

Group

Structured Investments

Investment Advisors

Trust Company

Fixed Income Management

Individual

Investor Group

Equity

Capital Markets

Fixed Income

Capital Markets

D.A. Davidson & Co.

Personal Wealth

Management

Financial Planning

Investment Advisory

Significant Distribution

Capabilities

Leading independent financial services firm providing trusted advice since 1935

Firm Overview

Diversified national financial services firm providing capital

markets and financial advisory services

85 offices in 23 states

1,300 employees; about 300 capital markets employees

Approximately $41.7 billion in assets under management,

including $34.9 billion in private client system

Over $350 million in revenue and nearly $200 million in equity

Independent and 100% employee-owned

Diversified & Complementary Businesses

Expansive private client brokerage network

Over 375 Financial Consultants that oversee $34.9 billion

in client assets across an extensive branch network of 65

retail offices

Full-service ECM platform with national presence

Completed over 500 M&A and capital raising transactions

over the last 10 years; top ranked M&A advisor

Comprehensive network of institutional investors and

private equity relationships


Nationally-recognized practice with proven domain and execution expertise

Investment Banking

Full-service Platform: public offerings,

private placements, M&A and corporate

advisory

Equity Research Institutional Sales & Trading

National Recognition: “Most Productive

Broker” by StarMine for the highest

number of ranked analysts in 2014

Unique Relationships: Over 700

institutional trading desks and market

making in over 500 NYSE/NASDAQ stocks

Full-Service Equity Capital Markets Platform

10 ECM offices across the United

States

Industry expertise within four macro

industry sectors

Over 125 employees in Investment

Banking, Research, Sales, Trading

& Syndicate

ECM Highlights

Denver

Salt Lake City

Orange County

Great Falls

Boston

Chicago

Seattle

New York

Baltimore

Portland

ECM Locations

National Scale, International Reach:

Top ranked Middle Market M&A

advisor in the U.S.

Access: Over 400 non-deal

roadshows completed for corporate

clients over the last two years

Comprehensive Coverage:

Proprietary research on

approximately 275 companies

FICM/IIG Locations


Broad Investment Banking Capabilities

Mergers &

Acquisitions

Public

Offerings

Private

Placements

Advisory

Private & Public Company Sales

Corporate Divestitures

Buy-Side Advisory

Recapitalizations

Leveraged Buyouts

Equity

Subordinated / Mezzanine Debt

Senior Debt

Private Investments in Public Equity

Fairness Opinions

Valuation Advisory

Restructuring / Recapitalization

Shareholder Rights Plans

Advised on over 400

M&A advisory

transactions between

2006 and 2015

Initial Public Offerings

Follow-On Offerings

Convertible Debt

Rule 144A Transactions

Raised over $18 billion

for public company

clients between 2006

and 2015

Active placement agent

on a number of equity

and debt placements

for leading middle-

market companies

Advise public & private

company boards and

management on a

variety of projects

Comprehensive capabilities allow us to provide tailored advice to each client


DTC Energy Group,

Inc.

Senior Secured

Credit Facility

has been acquired by

has been acquired by has raised unitranche debt

from

Industry Specialization Industry-focused teams providing comprehensive coverage and market expertise over four

macro sectors enables Davidson to provide timely, relevant, insightful advice to our clients.

Financial Consumer

Infrastructure

ENERGY ENGINEERING & CONSTRUCTION

FINANCIAL INSTITUTIONS REAL ESTATE ACTIVE LIFESTYLE FOOD & BEVERAGE

Industrials & Technology

TECHNOLOGY & TELECOM AEROSPACE & DEFENSE

has been acquired by has been acquired by

has received an

investment from

&

Stewart Capital

Management, LLC


Bluerock Residential

Follow-On Offering

a portfolio company of


has entered into a strategic

partnership with has been acquired by has been acquired by has acquired

ALTCem

Private Placement



Blake Whittemore, CFA

Associate

Investment Banking

(714) 850-8341

[email protected]

Davidson’s Engineering & Construction Team

E&C Team

Tim Sznewajs

Managing Director

Investment Banking

(303) 764-6023

[email protected]

Firm Leadership

Bill Johnstone

Executive Chairman

D.A. Davidson Companies

Jim Kerr

CEO

D.A. Davidson Companies

Monte Giese

Managing Director

Co-Head of

Investment Banking

(406) 268-3029

[email protected]

Rory McKinney

Managing Director

Co-Head of

Investment Banking

(310) 500-3865

[email protected]

Investment Banking Leadership

James Keckler

Director

Investment Banking

(310) 500-3863

[email protected]

Tyler Snover

Analyst

Investment Banking

(303) 764-5740

[email protected]

Robert Buckley

Analyst

Investment Banking

(303) 764-6010

[email protected]

Bryan Cummings

Managing Director

Head of Private Equity

Coverage

(714) 850-8339

[email protected]

Brit Stephens

Managing Director

ECM

(503) 603-3064

[email protected]

Sam Doyle

President

FICM

(303) 764-6036

[email protected]

Doug Woodcock

President

ECM

(503) 603-3001

[email protected]

Capital Markets Resources Product Specialists

Tom Tyree Jr.

Analyst

Investment Banking

(303) 764-6000

[email protected]


Top Ranked M&A Advisor to E&C Industry Davidson ranks among the top investment banks nationally for all middle market M&A

transactions

Davidson is the leader in middle market Infrastructure transactions based on independent data

from Mergermarket

Source: Mergermarket.

(1) U.S. transactions less than $250 million.

(2) U.S. transactions less than $500 million.

MM Infrastructure Deals: 2006 – 2015 (2) Middle Market Deals: 2006 – 2015 (1)

2006 - 2015 Middle Market M&A League Table

Rank Advisor Deals

1. Houlihan Lokey 703

2. Jefferies LLC 363

2. William Blair & Company 363

4. Lincoln International LLC 359

5. Lazard 353

6. Harris Williams & Co 318

7. D.A. Davidson & Co. 308

8. Goldman Sachs 298

9. Raymond James & Associates, Inc. 287

10. Robert W. Baird & Co. Incorporated 275

11. M&A International Inc 252

12. Piper Jaffray & Co. 246

13. JPMorgan 239

14. Sandler O'Neill & Partners, L.P. 232

15. RBC Capital Markets Inc 219

16. Stifel/KBW 216

17. Morgan Stanley 212

18. BB&T Capital Markets 200

19. Citi 194

20. Bank of America Merrill Lynch 192

20. Moelis & Company LLC 192

22. Duff & Phelps LLC 189

23. UBS Investment Bank 186

24. Credit Suisse 183

25. Evercore Partners Inc 159

2006 - 2015 Middle Market Infrastructure M&A Deals

Rank Advisor Deals

1. D.A. Davidson & Co. 30

2. Houlihan Lokey 23

3. Lincoln International LLC 23

4. Citi 18

5. UBS Investment Bank 16

6. KeyBanc Capital Markets Inc. 16

7. Duff & Phelps LLC 16

8. Harris Williams & Co 15

9. M&A International Inc 13

10. Moelis & Company LLC 12

11. BB&T Capital Markets 12

12. Lazard 11

13. GulfStar Group 11

14. William Blair & Company 10

15. Goldman Sachs 9

16. JPMorgan 9

17. Barclays 9

18. Morgan Stanley 8

19. Bank of America Merrill Lynch 8

20. Deloitte 8

21. Raymond James & Associates, Inc. 7

22. Piper Jaffray & Co. 7

23. Greene Holcomb & Fisher LLC 7

24. SunTrust Robinson Humphrey Capital Markets 6

25. Credit Suisse 6


Advisor and Underwriter of Choice

Public Equity Transactions

(Private)

Buy-side assignments

and Board advisory

(Nasdaq: STRL)

Buy-side, capital and

confidential assignments

(Private)

Confidential assignments

(TSE: 1802)

Confidential assignment

(Private)

Fairness Opinion in sale to

Orascom

(NYSE: PRIM)

Confidential assignment

(OM:SKA B)


(Nasdaq:AEGN)

Fairness Opinion in

acquisition of

Underground Solutions


(Publicly reporting)

Confidential

assignment

Buyside & Advisory Clients

$75mm

Withdrawn

Co-Manager Sole or Lead Manager

3 Secondary Offerings

$497mm

Managing Underwriter


$239mm

Initial Public Offering


$544mm

Initial Public Offering


$808mm

Secondary Offering


$169mm

Sole or Lead Manager


$145mm


$269mm

Secondary Offering

A D.A. Davidson & Co. banker

advised Black & Veatch

while employed at his previous firm.

Infrastructure Professional Services Expertise

Co-Manager

C$604mm

Secondary Offering



A D.A. Davidson & Co. banker advised

Burns and Roe in this transaction


has acquired

Fairness Opinion

Selected Recent Transactions


Sell-Side Advisor

Fairness Opinion

has agreed to acquire

$75mm

Filed for an initial public

offering

Co-Manager

has received

investment from

and

Financing

Le Grand

Johnson

Construction

Co.


has acquired

from

M&A Transactions


A D.A. Davidson & Co. banker advised

Flintco in this transaction



Infrastructure Professional Services Expertise

Co-Manager

Withdrawn

$75,000,000

January 2016

May 2014

Follow-On Offering

$15,330,000

Sole Manager Co-Manager

Withdrawn

$150,000,000

February 2014

Co-Manager

C$604,00,000

March 2016

Follow-On Offering

Co-Manager

Follow-On Offering

$577,440,000

July 2015

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T: (303) 571-6100

F: (303) 571-6135

www.davidsoncompanies.com/ecm/a_ib/

Orange County

611 Anton Boulevard | Suite 600 | Costa Mesa, California 92626

Seattle

701 5th Avenue | Suite 4050 | Seattle, WA 98104

Salt Lake City

110 South Regent Street | Suite 410 | Salt Lake City, UT 84111

Equity Capital Markets Office Locations

New York City

260 Madison Avenue | 8th Floor | New York, NY 10016

D.A. Davidson & Co.

Equity Capital Markets

1550 Market Street | Suite 300 | Denver, CO 80202

Boston

One International Place | 7th Floor | Boston, MA 02110

Great Falls

8 Third Street North | Great Falls, MT 59401

Chicago

30 N. LaSalle | Suite 1600 | Chicago, Illinois 60602

Baltimore

111 S. Calvert Street | Baltimore, MD 21202

Great Falls

8 Third Street North | Great Falls, MT 59401

mergers & acquisitions in the engineering & construction sector

Documents