Sei sulla pagina 1di 38

Infrastructure

A review of valuation trends and


capital markets activity

January 9, 2009

Basic Materials & Construction Services

Table of Contents
I.

Introduction

II.

Infrastructure Trends

III.

Comparative Valuation Considerations

IV.

Capital Markets Activity

V.

The Takeaway

Appendix

The foregoing material was prepared for informative purposes only and is not an offer to buy or sell any securities. Information contained in the document
was derived from sources considered reliable, but has not been independently confirmed or verified. The opinions expressed are the personal opinions of the
author, they do not necessarily reflect the opinions of any other person or entity, and they are subject to change without notice. Past performance is no
guarantee of future results.

Stephens Inc. 300 Crescent Court, Suite 600 Dallas, TX 75201 Phone (800) 643-9691 Fax (214) 258-2750

Introduction

Introduction

As the largest privately held investment bank off Wall Street, Stephens Inc. is dedicated to serving the advisory
needs of its diverse middle-market clients.

The Basic Materials & Construction Services team covers multiple sectors including Building Products,
Engineering and Construction, Cement and Aggregates, Metal Distribution and Fabrication, Plastic and Rubber
Products, Paper and Packaging, Coatings and Adhesives, Specialty Materials, and Capital Equipment.

Despite the current economic recession and softened construction forecast for 2009, we believe infrastructure as a
whole will experience growth in 2009 and 2010. Infrastructure investment has been recognized as a key
component of President-elect Obamas expected stimulus plan.
We have developed a public company valuation scorecard to identify the beneficiaries of infrastructure
spending and to provide guidance on expected valuations for private companies that possess desirable
public company attributes.

We have also examined recent capital markets activity to determine if current conditions are favorable for
public or private firms to consider raising capital or ownership alternatives.

As industry specialists, we remain bullish on the overall sector and are ready to deploy the necessary resources to
assist you in your advisory needs.

For additional information or to discuss our findings in more detail, please contact any of the following team
members.





Nick Beare, Managing Director


Justin Courtney, Vice President
Kirby Wilkerson, Sr. Associate
Tyler Boone, Analyst

214.258.2747
214.258.2748
214.258.2708
214.258.2749

Infrastructure Trends

Infrastructure Definition
The term infrastructure can include various types of construction and maintenance services. For purposes of this
report, infrastructure includes highways and streets, water supplies, wastewater systems, storm drainage systems,
mass transit, and airports, which are expected be the primary beneficiaries of President-elect Obamas economic
stimulus proposal. Under some definitions; Institutional and Utilities would also be included.

Residential
Construction

Commercial &
Manufacturing

Institutional
& Other

- Single Family
Housing

- Stores & Shopping


Centers

- Educational
Buildings

- Multifamily Housing

- Office Buildings

- Healthcare Facilities

- Hotels & Motels


- Other Commercial
Buildings

Public Works
(Infrastructure)
- Highways & Bridges

- Power Plants

- Environmental

- Transmission Lines

Drinking Water

- Natural Gas Plants

Waste Water
Treatment

- Wind Farms

Sewers / Storm
Drainage

- Manufacturing
Buildings

River / Harbor
Development
- Other Public Works
Mass Transit
Airports

Utilities

- Telecom

State of U.S. Infrastructure


Underinvestment in Infrastructure

From 2002 to 2007, public spending on


transportation infrastructure increased at a CAGR
of 5.4%.

$110.0
$99.0

$100.0

$91.0

$90.0
Spending ($ in bil.)

Public Construction Put into Place

Over the same time period, public spending on


water supply and waste water infrastructure
increased at a CAGR of 6.9%.

$82.0
$76.0

$80.0
$70.0
$60.0
$50.0

$39.0

$37.0

$40.0
$28.0

$30.0

Despite the increases, spending has not kept pace


with usage and as a result, U.S. highway and water
infrastructure
systems
have
deteriorated
significantly.

$77.0

$75.0

$28.0

$33.0

$30.0

$20.0
$10.0
$2002

2003

2004

2005

Transportation & Highway/Street

2006

2007

Water Supply & Wastewater

Source: U.S. Census Bureau

Significant Needs





Growth of Highway Demand and Congestion

An estimated $1.6 trillion is needed by 2012 to


repair the U.S.s existing infrastructure.1

180.0%

171.4%

160.0%

Approximately 34% of major roads in the U.S. are


deemed in poor or mediocre condition.1

140.0%
Increase, 1982 to 2006

One out of four U.S. bridges have been determined


to be structurally deficient or functionally obsolete.2
$1 trillion is needed over the next 20 years to repair
the nations water and wastewater systems.1

120.0%
94.5%

100.0%
80.0%
52.4%

60.0%
40.0%

28.4%

36.2%

20.0%

6.6%

0.0%
Population

1.
2.

Drivers

Vehicles

Vehicle Miles
Traveled

Lane-Miles of Hours of Delay


Road

Source: American Road & Transportation Builders Association (ARTBA)

American Society of Civil Engineers (ASCE)


American Association of State Highway & Transportation Officials (AASHTO)

State of U.S. Infrastructure


Current Funding


Federal Highway Investment

The Federal Highway Trust Fund (HTF) is the


principal source of funding for highway projects.

$45.0
$42.0

HTF is funded primarily from a 18.4 cents per


gallon federal excise tax on gasoline (unchanged
since 1993).
Nearly 45% of all highway spending comes from
the HTF. With the remaining 55% coming from
state and local governments.

$42.5

$40.0

$40.0

$40.0

$38.0
$36.0

$37.5
($ in bil.)

$34.0

$35.0
$32.5
$30.0
$27.5

In Sept. 2008, the U.S. Congress transferred $8.0 billion


to the HTF due to the shortfall in gas tax revenue
caused by high oil prices.

$25.0
2004

2005

2006

2007

2008

2009

Source: U.S. Department of Transportation (U.S.DOT)

The current five-year, $286.0 billion federal highway


spending bill, known as SAFETEA-LU, is set to expire
on Sept. 30, 2009.
Reauthorization of SAFETEA-LU is expected to occur
in late 2009 with the federal excise tax on gasoline
increasing by at least 10 cents and the addition of
programs to encourage private sector financing.

Investment Shortfall


From 2004 to 2009 SAFETEA-LU funding was


insufficient to maintain U.S. highway conditions.

After 2009, the estimated annual investment gap to


maintain current conditions on highways (min. needs)
is $19 billion annually.

Federal Highway Investment Shortfall


$70.0

Current SAFETEA-LU

New Legislation

$60.0
$50.0

($ in bil.)

$40.0
$30.0
$20.0
$10.0
$-

2004

2005

2006

2007

2008

2009

Minimum Needs

2010

2011

2012

2013

SAFETEA-LU

Source: American Road & Transportation Builders Association (ARTBA)

2014

2015

State of U.S. Infrastructure


Water / Wastewater Needs


Wastewater infrastructure needs are estimated at


$202.5 billion over the next 20 years

Water Infrastructure Network estimates total water


infrastructure needs range between $400 - $600 billion
over a 20-year period

Drinking Water Infrastructure Needs*

U.S. EPA estimates that $276.8 billion is needed over


the next 20 years to repair and improve the U.S.
drinking water infrastructure.
30% of the pipes are between 40 - 80 years old
10% of the pipes are more than 80 years old

Source, $12.8

Other, $2.3

Storage, $24.8

Treatment, $53.2

Transmission &
Distribution, $183.6

Source: U.S. EPA


* Estimated over the next 20 years

The increase in needs is due to a combination of


population growth, more protective water quality
standards, and aging infrastructure.

Wastewater Infrastructure Needs*


Other, $4.3

Investment Shortfall


Storm Water
Management,
$9.0

The U.S. faces an investment "gap" of more than $20


billion a year. Federal water and wastewater funding
is approximately $3 billion a year versus $23 billion a
year in estimated needs, according to the ASCE.

Sewer Overflows,
$54.8

Most capital spending on water/wastewater projects


comes from local water authorities. Budget shortfalls
have delayed and canceled capital spending for
improvement and expansion projects.

Waste Treatment
Systems, $134.4
Source: U.S. EPA
* Estimated over the next 20 years

Future Infrastructure Investment


Future Funding


President-elect Obamas economic stimulus plan is estimated to be $500 - $700 billion (as high as $850 billion), of
which $100 - $200 billion is expected to be earmarked for infrastructure spending.

During the Nov. 4, 2008 elections voters approved more than $70.0 billion in state and local transportation funding.

Readily Available Projects




AASHTO1 estimates there are 5,148 highway projects costing $64


billion that could be started in 180 days.

The U.S. Conference of Mayors estimates 11,391 infrastructure


projects costing $73 billion could be started and completed in two
years.

We will create millions of jobs by


making the single largest new
investment in our national
infrastructure since the creation of the
federal highway system in the 1950s.
President-elect Barack Obama , 12/6/08

The National Governors Association estimates $136 billion worth


of state projects could be started within 90 days.
Projects Ready to Begin

Economic Impact

Project

U.S. Federal Highway Administration estimates that 35,000 jobs are


supported by every $1.25 billion spent on transportation projects.

Funding Needed, in billions

City Streets/Metro Roads

$17.35

Water/Wastewater

$15.37

Community Development

The U.S. Conference of Mayors estimates every $1 billion of


transportation infrastructure spending generates $5.7 billion in
additional economic activity and 35,000 jobs.

$12.68

Transit

$7.07
$6.27

Energy/Green Jobs
Airports

$4.04

School Modernization

$3.73

Public-Safety Jobs/Technology

Moodys estimates every dollar of infrastructure spending boosts


GDP by $1.59. Thus, $150 billion in infrastructure spending would
generate a $240 billion increase (or close to a 2% increase) in GDP.

10

1.

Public-Housing Modernization
Amtrak

$3.70
$1.90
$1.06

Source: U.S. Conference of Mayors

American Association of State Highway & Transportation Officials (AASHTO)

Private Investment Opportunities


43 States Face Budget Shortfalls

Private Public Partnerships to Bridge State / Local Funding Gaps




Many state/local governments are expecting budget shortfalls


due to declining tax revenues.

WA

NH
MT

VT

ND

OR

MA
WI

ID

SD

43 states are projecting shortfalls in FY09 and/or FY10

NY
MI

WY
IA

PA

NE

NV

IL

UT

Tax revenue shortfalls for use in maintaining roads, highways,


and bridges has led some states and cities to turn to private
capital to supplement or replace public financing.
The privatization of roads, highways , bridges, and airports
through private public partnership (PPPs) transactions can be
viewed an alternative to raising taxes and fees.

ME

MN

OH

IN

WV

CO

CA

RI
CT
NJ
DE
MD

KS

VA

MO

KY
NC

AZ

OK

NM

TN

AR

SC
MS

TX

AK

AL

GA

LA

HI

FL

Source: Center on Budget and Policy Priorities


Note: Shading denotes projected budget shortfall in 2009 and/or 2010

23 states have passed legislation allowing government officials to sell or lease roads, highways, and airports.

The U.S. market for private investments in infrastructure assets via PPPs is still relatively immature.

Investment Opportunities for Infrastructure Funds




Globally, nearly $94 billion of infrastructure funds, which provide private sector investments in infrastructure
assets, are in or coming to the market in the next 12 months.1

Over the past two years, roughly 30 dedicated funds have been launched, and $40 - $60 billion of equity capital has
been raised for investing in infrastructure assets in Europe and North America.1

Recent private public partnerships by infrastructure funds include:


Chicagos 36,000 metered parking system for $1.2 billion - Morgan Stanley Infrastructure

Chicagos Midway Airport for $2.5 billion - Citi Infrastructure Investors


Florida's I-595 toll road corridor for $1.8 billion - ACS Infrastructure Development
11

1.

Citi Alternative Investments, July 2008

Comparative Valuation Considerations

Infrastructure Peer Group


Construction Companies
Aecon Group Inc (TSE: ARE)
Fluor Corporation (NYSE: FLR)
Granite Construction Inc.(NYSE: GVA)
KBR, Inc. (NYSE: KBR)
Layne Christensen Company (NASDAQ: LAYN)

Perini Corporation (NYSE: PCR)


Sterling Construction Co., Inc. (NASDAQ: STRL)
URS Corporation (NYSE: URS)
Willbros Group, Inc. ( NYSE: WG)

Aggregates / Cement Producers


CEMEX, S.A.B. de C.V. (NYSE: CX)
Eagle Materials, Inc. (NYSE: EXP)
Holcim Ltd. (VTX: HOLN)
Martin Marietta Materials, Inc. (NYSE: MLM)
Texas Industries, Inc. (NYSE: TXI)

Trinity Industries, Inc. (NYSE: TRN)


U.S. Concrete, Inc. (NASDAQ: RMIX)
U.S. Lime & Minerals Inc. (NASDAQ: USLM)
Vulcan Materials Company (NYSE: VMC)

Construction Equipment Manufacturers


Astec Industries, Inc. (NASDAQ: ASTE)
Caterpillar Inc. (NYSE: CAT)
CNH Global N.V. (NYSE: CNH)
Deere & Company (NYSE: DE)
Manitowoc Company, Inc. (NYSE: MTW)

Terex Corporation (NYSE: TEX)

Specialty Construction Services


Chicago Bridge & Iron Company N.V. (NYSE: CBI)
Dycom Industries, Inc. (NYSE: DY)
EMCOR Group, Inc. (NYSE: EME)
Integrated Electrical Services, Inc. (NASDAQ: IESC)
Insituform Technologies, Inc.(NASDAQ: INSU)

Infrastructure Product Manufacturers


Ameron International Corporation (NYSE: AMN)
L.B. Foster Company (NASDAQ: FSTR)
Mueller Water Products, Inc. (NYSE: MWA)
Northwest Pipe Company (NASDAQ: NWPX)
Valmont Industries, Inc. (NYSE: VMI)

13

MasTec, Inc. (NYSE: MTZ)


MYR Group Inc. (NASDAQ: MYRG)
Quanta Services, Inc. (NYSE: PWR)

Infrastructure EBIT Multiples


Observations


Aggregates / Cement Producers trade at higher EBIT multiples due to limited supply, strong demand, and
resilient pricing.

DE and CAT enjoy expanded multiples due to global demand, branded products, as well as diverse end markets
including mining, agriculture, energy, and forestry.

Construction Companies and Specialty Construction Services firms multiples have been negatively impacted by
exposure to commercial and retail projects and declining backlogs.

Size is important as smaller companies are negatively impacted by cyclicality and profitability of large projects.

2009 EBIT Multiples


Aggregates / Cement Producers

Construction Companies

Construction Equip. Mfg.

Infrastructure Product
Manufacturers

Specialty Construction Services

35.0x

30.0x

23.4x

25.0x

20.0x

17.3x

17.3x

16.4x

15.1x
15.0x

12.8x

13.2x

12.4x

11.2x
9.9x
10.0x

8.1x

7.2x

9.0x

8.5x

9.5x

9.2x

8.1x

8.9x

6.8x

6.5x
5.0x

3.9x

5.0x

3.5x

7.4x

7.8x

7.7x
6.2x

5.3x

5.2x

4.8x

9.0x
7.6x

3.8x

3.3x

3.0x

1.5x
N/M

0.0x
GVA

URS

STRL

FLR

ARE

LAYN

PCR

KBR

WG

VMC

MLM

EXP

TXI

CX

HOLN USLM

Source: Capital IQ and Bloomberg Consensus Estimates

TRN

RMIX

DE

14

CAT

CNH

ASTE

TEX

MTW

INSU

PWR

DY

IESC

MTZ

MYRG

EME

CBI

MWA NWPX

Note: 3.0% annual growth assumed for 2009 if estimates unavailable.


Yellow line denotes median EBIT multiple

VMI

AMN

FSTR

Market Capitalization Trends


Despite the weakening economy and credit crisis,
market capitalizations of the infrastructure peer group
have rebounded dramatically over the past 60 days.

A heavy dependence on energy related projects


has limited the recovery of some companies share
prices.

15

% of
52 - Week
High Price

8,959.1
3,323.1
2,759.2
1,597.4
1,256.1
463.6
429.7
437.6
248.6

49.36
39.80
17.08
41.75
24.96
9.11
22.15
11.18
18.88

72.6%
99.6%
74.6%
96.9%
117.0%
89.8%
113.8%
107.8%
145.2%
101.9%

48.7%
79.7%
42.6%
83.5%
55.2%
52.0%
38.0%
23.3%
82.4%
56.2%

HOLN
CX
VMC
MLM
TRN
TXI
EXP
USLM
RMIX
Average

15,133.1
8,001.0
6,939.2
4,139.2
1,350.5
836.6
842.6
155.1
128.1

57.56
10.29
63.00
99.92
16.98
30.38
19.35
24.51
3.49

49.8%
156.6%
59.4%
70.5%
81.8%
57.2%
48.7%
24.4%
90.7%
71.0%

54.7%
31.6%
62.8%
79.7%
41.3%
37.8%
49.8%
53.8%
55.8%
51.9%

CAT
DE
CNH
TEX
MTW
ASTE
Average

26,554.4
19,079.9
4,368.2
1,683.5
1,093.6
669.0

44.02
45.18
18.40
17.74
8.39
29.86

37.8%
58.5%
67.3%
97.8%
84.0%
75.6%
70.2%

51.2%
47.6%
28.3%
23.3%
18.5%
70.5%
39.9%

PWR
EME
CBI
MTZ
INSU
DY
MYRG
IESC
Average

4,034.9
1,361.1
1,151.8
830.8
550.0
339.8
256.3
167.7

20.45
20.79
12.09
12.23
19.69
8.63
13.00
11.46

93.7%
86.1%
136.1%
120.4%
112.6%
79.8%
160.0%
190.9%
122.4%

57.8%
57.7%
21.7%
77.7%
94.6%
34.0%
72.2%
51.3%
58.4%

VMI
MWA
AMN
NWPX
FSTR
Average

1,614.0
887.7
568.8
404.8
327.6

61.72
7.69
61.95
44.09
31.96

64.7%
126.2%
90.6%
135.1%
59.8%
95.3%

51.0%
60.5%
44.7%
67.6%
65.3%
57.8%

Construction Companies

Companies with market caps over $2 billion


recovered at a lower rate than those with market
caps below $2 billion. Large cap companies tend
to be well followed by more analysts and are
typically less volatile than mid and small cap
companies.

% Change
From 52 - Week
Low Price

FLR
URS
KBR
GVA
PCR
ARE
LAYN
WG
STRL
Average

Aggregates / Cement
Producers

News of President-elect Obamas infrastructure


plan is primarily responsible for the upturn in
share prices. Despite some analysts calling the
increase in share prices a market over reaction,
the share prices of the infrastructure peer group
have continued to increase.

Current
Price

Construction
Equipment
Manufacturers

Company

Market Cap.
As of 1/8/09

Specialty Construction
Services

The S&P 500 reached its 52 week low on Nov. 21


and rebounded by 23% as of Jan. 8. During that
same period the infrastructure peer group
increased by 66%.

($ in millions)

Infrastructure
Product Mfg.

Share Price Movement

Source: Capital IQ

Indexed Price Performance Past Three Months


(October 8, 2008 January 8, 2009)

Infrastructure companies have recently moved back in favor with investors as a result of President-elect Obamas
stimulus plan that includes major investments in infrastructure.
11/4/08 Obama elected
President of the U.S.

140

130

120

11/21/08 Congress
postponed stimulus plan
until after Obamas
inauguration, leading to
an increase in the
expected amount
designated for
infrastructure.

10/27/08 Obama reemphasized his support


for a $60 B National
Infrastructure
Reinvestment Bank.

12/8/08 - Obama
announced his
administrations
significant infrastructure
spending plan.

26.2%

17.0%

Indexed Prices

110

9.3%
5.1%
2.2%

100

-7.6%

90

80

70

60

50
10/8/08

10/17/08

10/28/08

Construction
Companies

11/7/08

Aggregates /
Cement Producers

Source: FactSet

11/17/08

11/28/08

Specialty
Construction Services

16

12/8/08
Construction
Equip. Mfg.

12/18/08

12/26/08
Infrastructure
Product Mfg.

1/8/09
S&P 500

Valuation Analysis
The valuation scorecard uses seven metrics* to identify the value drivers for public companies that serve the
infrastructure end market.
Median Scorecard Metrics

EBIT Margin vs. 05-09 CAGR


20.0%

EBIT Margin

Construction
Companies

Aggregates /
Cement
Producers

Construction
Equipment
Mfg.

4.5%

14.0%

10.7%

Specialty
Infrastructure
Construction
Product
Services
Mfg.
4.4%

33.4%

1.2%

8.9%

31.6%

20.5%

Market Cap.

$1,256.1

$1,350.5

$3,025.8

$690.4

$568.8

Analyst Cov.

USLM
16.0%

8.8%

EBIT CAGR

15

23.7%

48.3%

51.7%

16.8%

29.0%

3
18.0%

MLM
TRN

HOLN

14.0%

LTM EBIT Margin

($ in mil.)
Scorecard
Metrics

MTW
12.0%

DE
CAT

10.0%

NWPX

CNH

VMI

ASTE

TEX

MTZ

TXI
8.0%
AMN

GVA

FSTR

STRL
LAYN

6.0%

Debt / Cap.
ROIC
Infrastructure
Markets*

INSU

EME

4.0%

FLR

KBR

11.6%

5.9%

12.3%

5.9%

8.8%

2.0%

0.0%

ARE

PWR

URS

MYRG

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

'05-'09 EBIT CAGR

Debt / Cap. vs. ROIC

Market Cap. vs. Analyst Coverage


90.0%
$28,000
$26,000

1
CAT

80.0%

DE

CAT

$24,000

70.0%

$22,000

$16,000

HOLN

$14,000
$12,000
$10,000

$6,000
$4,000

RMIX

50.0%

EXP

HOLN

TXI

PWR

10

DY

URS

INSU
10.0%
MTW
WG

12

14

CBI
16

TEX

3
18

20

22

0.0%
0.0%

24

# of Analysts

Source: Capital IQ

VMI

GVA
NWPX
STRL
ARE

20.0%

MLM
URS
MWA

TEX
MTZ

USLM

CNH

GVA

TRN

CX

CX
VMC

KBR
TRN
1
$2,000
AMN PCR VMI INSU ARE EME
USLM IESC
DY
EXP
NWPX
$MYRG
STRL TXI RMIX
2
4
6
8

MLM

VMC

MWA

40.0%
30.0%

FLR

$8,000

CNH

60.0%

DE

$18,000

Debt / Cap.

Market Cap. ($ in mil.)

$20,000

WG

PWR MYRG

EME

IESC
AMN

KBR
5.0%

MTW

FSTR
LAYN

10.0%

PCR

FLR

ASTE

15.0%

20.0%

4
25.0%

30.0%

ROIC

17

*EBIT Margin, EBIT CAGR, Market Cap., Analyst Coverage, Debt / Total Cap., ROIC,
and Exposure to the Infrastructure Market

Valuation Scorecard
Observations


Aggregates / Cement Producers are enjoying high multiples due to high margins (avg. EBIT margin of 14.0%), lower
oil/gas prices (used in bitumen and asphalt), and high exposure to highway and road projects.

Construction Equipment Manufacturers enjoy the largest market capitalizations, high margins (10.7%), highest
analyst coverage (avg. of 15 analysts), and highest ROIC (avg. 12.3%) versus the other subsectors primarily due to the
inclusion of CAT and DE. The subsector trades at a median EBIT multiple of 8.2x.

Construction Companies and Specialty Construction Services companies have received a minimal halo effect from
the expected increase in infrastructure spending due to the unknown size and timing of the program. Companies in
the subsector are very dependent upon their backlogs future work that has been secured.

The scorecard formula indicates that TEX, MTW, EME and CBI are somewhat undervalued as they trade at relatively
low EBIT multiples among the peer group but scored high in our ranking.
Scorecard vs. 2009 EBIT Multiple
Aggregates / Cement Producers

Construction Companies

Construction Equip. Mfg.

Infrastructure Product
Manufacturers

Specialty Construction Services

32

35.0x

28

30.0x

24
25.0x
20

Score

16
13
12
12

11

12
11

10

10

11

12

10

10

10

11
10

8
7

15.0x

12
11

10

12

11

8
7

10.0x

6
5
4

5.0x

0.0x
FLR

STRL

GVA

WG

LAYN ARE

URS

KBR

PCR

VMC

MLM

CX

HOLN EXP

TXI

USLM TRN

Source: Capital IQ and Bloomberg Consensus Estimates

RMIX

TEX

18

ASTE MTW CNH

DE

CAT

PWR

EME

CBI

MTZ

INSU MYRG IESC

DY

MWA

VMI

Note: Yellow line denotes the median EBIT multiple for the subgroup

FSTR NWPX AMN

EBIT Multiple

20.0x

Capital Markets Activity

Capital Considerations
Construction firms have moved in and out of favor over the past 12 months as investors have chased the
beneficiaries of growth trends in energy and infrastructure.

The credit crisis has led to decreased nonresidential construction activity .


Tighter bank lending standards have made it difficult for developers to finance new construction projects
and resulted in the postponement of planned projects.
The credit crunch has made bank debt difficult to obtain (particularly for companies that bond).
Many companies are being constrained by existing bank covenants and approaching loan maturities. Often
bankers are reluctant to recommit capital without expensive fees and/or restrictive terms and conditions.
Earlier in the year cash infusions from private investors, rights offerings and convertible debt offerings were
financing alternatives used by construction companies.

Turbulence in the capital markets as evidenced by sharp declines in most stock indexes have left the public equity
and debt markets relatively closed. Public companies have responded by filing shelf registrations to take
advantage when the market rebounds (examples include: FLR, KBR, INSU, WG, STRL, URS, VMC).

Private equity firms are still looking to deploy capital in attractive situations; however, firms that have traditionally
relied on leverage to purchase businesses are reviewing alternatives such as PIPEs and minority investments, as
well as purchasing senior debt.

M&A activity is down significantly in the basic materials and construction services industries, although a number
of noteworthy deals occurred, including:
Insight Equity acquiring Meadow Valley for $88.7 million
KBR acquired BE&K, Inc. for $550.0 million
The Brock Group of Companies acquired Atlantic Industrial for $250.0 million

20

Capital Markets Activity - General

Recent market pull back was driven by the collapse of key


financial institutions, and general market volatility.
IPO activity has come to a halt as of late.
Investors are waiting for stability in the market before
returning to traditional investments.
Sept. was the slowest month in terms of number of IPOs
since 1995.
On a worldwide basis, $181 million was raised in IPOs
during September, compared to $9.4 billion for the same
period a year ago.

U.S. IPO / FO Activity


1,800
1,600
1,400

Number of Deals

1,200
1,000

1,265

Although new stock issuance is down, investors are willing


to invest additional funds in existing names under the
correct circumstances.

833

545

600

463
635

573

400

359
570

200

395

345
176

207

188

2001

2002

2003

403

345

323

323

2004

2005

2006

180

0
1999

2000

IPO

2007

2008

FO

U.S. issuers.
Source: Capital IQ

Activity is dominated by financials that sought badly


needed capital amid massive write-downs.


1,168

1,104

1998

1,235

552

800

U.S. M&A Activity

M&A activity is slow due to the scarcity of credit. In Nov.


397 deals were announced, the lowest level since Sept. 2001.

$2,000

4,000

$1,800

3,500

$1,600
3,000
Deal Value ($ in bil.)

With no financing to back deals, private equity firms are


taking on smaller transactions, making direct investments
in public companies (aka PIPEs), and making minority
investments in public and private companies.

$1,400
2,500

$1,200
$1,000

2,000

$800

1,500

$600
1,000
$400

Most companies with cash are hoarding it. Industrials in


the S&P 500 are sitting on nearly $650 billion in cash.

500

$200
$-

0
1998

1999

2000

2001

2002

2003

Deal Value

Includes U.S. deals with reported values.


Source: Capital IQ

21

2004

2005

No. of Deals

2006

2007

2008

No. of Deals

Capital Markets Activity Infrastructure Related*


($ in millions)

Infrastructure M&A Activity

Infrastructure capital markets activity slowed


significantly in 2008 compared to 2007, and activity is
expected to remain down until stability returns to the
market.

$30,000
$25,000

M&A activity in 2008 was dominated by small deals


in the first half of the year. Perini Corp.s acquisition
of Tutor Saliba ($885.8 million) was the largest M&A
transaction in the sector.

$20,000

IPO and follow-on activity decreased significantly in


2008 due to market volatility.

$5,000

$17,847

120

$19,304

$17,787

100

$10,000

80
$8,048

$7,615

60
40

$4,328
$2,114

$1,916

20

$1,435

$-

0
1998

1999 2000 2001

2002 2003 2004 2005 2006 2007


Value
# of Deals

2008

Infrastructure IPO Activity

Infrastructure FO Activity
$4,500

$4,263

$3,000

16

$4,000

14

$3,500

$2,765

$2,500

$2,000

$1,500

12

$3,000

10

$2,516

$2,500
$2,000

140

$20,183

$15,000

Capital markets activity is expected to improve in


2009 as the credit markets gradually recover and
share prices continue to increase.

160
$25,005

$2,158
$1,546

$1,500

8
$1,321

$1,314

$1,258
$979

$1,000

$656

$578

$1,000
$543

$595

$500

$500
$1999

2000

2001

2002
Value

2003

2004

2005

2006

2007

$119

$115

1999

2000

$300

$206
$-

$-

$-

2001

2002

2003

Value

# of Deals

22

1
-

1998

2008

Source: Capital IQ
Note: Activity includes U.S. pending and completed deals.

$242

$561

$-

1998

2004

2005

2006

2007

2008

# of Deals

*Infrastructure includes heavy construction, concrete / aggregates producers, construction


machinery and equipment manufacturers.

Notable M&A Transactions


($ in millions)
Ann. Date
11/21/08
11/18/08
11/5/08
10/24/08
10/6/08
10/4/08
9/19/08
9/7/08
8/25/08
8/19/08
8/18/08
8/18/08
8/8/08
8/5/08
8/4/08
7/28/08
7/15/08
7/11/08
6/30/08
6/18/08
6/5/08
5/30/08
5/16/08
5/12/08
5/12/08
5/7/08
5/6/08
5/1/08
4/21/08
4/11/08
4/3/08
4/2/08
3/31/08
3/13/08
2/29/08
2/29/08
2/28/08
2/5/08
1/31/08
1/17/08
1/13/08
12/31/07
12/31/07
12/25/07

Target
Orionidas, S.A.
Stainton Metal Company
MOR PPM Inc.
Meadors Construction Co. Inc.
Wabi Development Corp.
Wanzek Construction, Inc.
Mountaineer State Energy, Inc.
Gehl Co.
Tryck Nyman Hayes, Inc.
Eagle Materials Inc. (5% ownership)
Prince Contracting Co., Inc.
LopezGarcia Group
Fantuzzi Industries
Dillman Equipment, Inc.
Southern Aggregates LLC
Meadow Valley Corp.
Gremada Industries, Inc.
Travis Aggregages, Inc.
Snelson Companies, Inc.
Shaw T&D Company, Inc.
Barnhart, Inc.
TXI (SE Louisiana Sand & Gravel Assets)
Wittman Hydro Planning Associates
FNF Construction
Mid-Land Equipment Co.
Atlantic Industrial, Inc.
BE&K, Inc.
Pumpco, Inc.
Hydra Platforms Manufacturing, Inc.
VMC (Six Quarry Locations)
Mechanical Services of Central Florida, Inc.
Tutor-Saliba Corporation
Lovat, Inc.
Pavestone Company
Subaqueous Services
Xuzhou Xuwa Excavator Machinery Co., Ltd.
Riddleberger Brothers, Inc.
West Coast Engineering
Pipeline Systems Inc.
Valmont PennSummit
A.S.V. Inc.
City Concrete Company
Tierdael Construction Company
Marmon Holdings, Inc.

Source: Capital IQ

Target Description

Buyer/Investor

Construction aggregates
Manufactures steel lighting columns
Provides support services
Constructs water treatment facilities
Construction firm
Construction firm
Oil & gas pipeline construction
Construction & agricultural equipment
Engineering firm
Construction materials
General contractor
Engineering firm
Manufactures port equipment
Asphalt plant equipment
Construction aggregates
Construction firm
Equipment manufacturer
Construction aggregates
Pipeline construction
Power transmission & distribution
Construction site management solutions
Gravel and sand pits
Water resource consulting firm
Heavy construction firm
Manufactures construction equipment
Scaffolding services
Industrial engineering firm
Pipeline construction
Manufactures access platforms
Construction aggregates
Provides mechanical mobile services
General contractor
Manufactures tunnel boring machines
Concrete product manufacturer
Marine construction firm
Construction machinery
Mechanical contractor
Steel / aluminum pole manufacturer
Designs slurry transport systems
Designs & manufactures steel tubing
Rubber track machines
Construction aggregates
Municipal & highway contractor
Construction & transportation firm

23

CEMEX
Valmont Industries
EMCOR Group
Layne Christensen (Reynolds, Inc.)
KBR, Inc.
MasTec North America Inc.
New Concept Energy, Inc.
Manitou BF
URS Corp.
Ash Grove Cement Company
Soares Da Costa America, Inc.
URS Corp.
Terex Corp.
Astec Industries Inc.
VantaCore Partners LP
Insight Equity
Caterpillar Inc.
Texas Industries, Inc.
Oaktree Capital Management
Pike Electric, Inc.
Balfour Beatty plc
Lafarge North America, Inc.
Layne Christensen Inc.
J.H. Whitney & Co.
Titan Machinery, Inc.
The Brock Group of Companies
KBR, Inc.
MasTec North America Inc.
Terex Corp.
Martin Marietta Materials Inc.
EMCOR Group
Perini Corp.
Caterpillar Inc.
CRH plc
Orion Marine Group
Deere & Co.
Comfort Systems USA Inc.
Valmont Industries
Ausenco Limited
Valmont Industries
Terex Corp.
Memphis Ready Mix
Layne Christensen
Berkshire Hathaway Inc.

Note: Includes announced and closed deals.

Transaction Val.

--3.3
--4.5
19.5
171.7
15.6
402.1
21.8
53.5
33.7
--323.2
21.3
50.0
88.7
62.0
----24.3
116.0
--2.5
--14.4
250.0
550.0
61.0
--192.0
--885.8
57.6
540.0
39.8
--43.0
37.5
38.7
115.2
490.3
7.2
6.9
4,500.0

Enterprise Value/
Rev.
EBITDA
----------0.6x
--1.1x
--2.1x
0.3x
--------0.2x
------0.2x
0.2x
------0.3x
--0.3x
0.9x
------0.8x
--1.5x
0.8x
--0.7x
1.3x
--1.2x
2.3x
0.3x
--0.6x

--------------13.4x
--8.5x
----------3.8x
--------5.1x
------------------------8.3x
3.7x
----------24.0x
-------

Notable M&A Transactions


($ in millions)
Ann. Date
12/20/07
12/9/07
11/30/07
11/30/07
11/19/07
11/16/07
11/15/07
11/6/07
10/31/07
10/31/07
10/31/07
10/12/07
10/2/07
9/25/07
9/19/07
8/29/07
8/24/07
8/24/07
7/31/07
7/29/07
7/9/07
7/3/07
6/11/07
5/27/07
4/30/07
4/20/07
3/22/07
3/18/07
2/26/07
2/22/07
2/19/07
2/1/07
1/31/07
1/4/07
1/4/07

Target
Power Partners MasTec, LLC
Energy Maintenance Service, LLC
CEMEX (AZ & FL Operations)
Solmetex, Inc.
U.S. Concrete, Inc.
Living Earth Technology Company
Wilder Construction Company
Superior Highwall Miners, Inc.
Integrated Service Company LLC
Road & Highway Builders, LLC
Trigon EPC, LLC
Oglebay Norton Co.
Two Construction Materials Cos.
Flatiron Construction Corp.
U.S. Silica Company, Inc.
The Feldspar Corporation
Cb&i Lummus Global, Inc.
Ambuja Cements Ltd.
Schiavone Construction Co.
Bobcat Company
rePipe, Inc.
Continental Pipe Manufacturing Co.
Peterson Pacific Corp.
Washington Group International Inc.
Jurong Cement Ltd.
AfriSam South Africa
Edwards and Kelcey, Inc.
InfraSource Services Inc.
St. Lawrence Cement Group Inc.
TIMEC Company, Inc.
Florida Rock Industries, Inc.
The Karson Group
Centex Construction Group
Fast Fabricators Inc.
Handyman Concrete Inc.

Source: Capital IQ

Target Description

Buyer/Investor

Wind energy
Wind energy
Construction aggregates
Offers mercury removal technology
Construction aggregates
Soil amendments
Construction firm
Mining system manufacturer
Construction firm
Heavy civil construction
Construction & engineering firm
Industrial minerals
Construction aggregates
Transportation & civil construction
Construction aggregates
Construction aggregates
Engineering & construction management
Construction aggregates
Construction firm
Manufactures construction equipment
Underground pipeline construction
Designs & manufactures steel pipe
Heavy construction
Construction & engineering firm
Construction aggregates
Construction materials
Construction & engineering firm
Specialty contractor
Construction aggregates
Construction firm
Construction materials
Construction materials
Commercial construction firm
Iron pipe fabricator
Construction aggregates

24

MasTec Inc.
Broadwind Energy, Inc.
CRH plc
Layne Christensen
Oldcastle Materials, Inc.
Hunt Special Situations Group
Granite Construction Inc.
Terex Corp.
Willbros USA, Inc.
Sterling Construction Co. Inc.
CH2M Hill Companies Ltd.
Carmeuse Lime & Stone, Inc.
Votorantim Cimentos North America, Inc.
Hochtief AG
Harbinger Capital Partners
Imerys SA
Chicago Bridge & Iron
Holcim Ltd.
Dragados Inversiones USA
Doosan Infracore Co. Ltd.
Inland Waters Pollution Control, Inc.
Northwest Pipe Co.
Astec Industries Inc.
URS Corp.
Holcim Ltd.
Holcim Ltd.
Jacobs Engineering Group, Inc.
Quanta Services Inc.
Holcim Ltd.
Transfield Services Ltd.
Vulcan Materials Company
Aecon Group, Inc.
Balfour Beatty plc
Mueller Water Products
Ennstone Inc.

Note: Includes announced and closed deals.

Transaction Val.
$

13.2
36.1
250.0
14.5
16.5
37.0
28.0
146.0
221.9
54.9
34.6
654.7
225.0
240.0
300.0
41.0
850.0
295.8
150.0
4,900.0
80.5
--31.1
3,168.4
11.3
967.6
56.6
1,337.8
649.6
100.0
4,469.9
42.0
422.0
24.5
9.0

Enterprise Value/
Rev.
EBITDA
--3.5x
----0.5x
0.7x
0.5x
--0.7x
0.8x
--1.7x
--0.4x
--1.4x
0.9x
4.9x
--1.9x
1.6x
----0.8x
1.3x
----1.3x
1.6x
0.4x
3.2x
---------

----------------7.2x
2.6x
--11.7x
----------12.4x
----------15.3x
50.4x
----17.5x
11.3x
--11.2x
---------

Notable Public Offerings


($ in millions)
Ann. Date

Issuer

Issuer Description

12/17/08
9/15/08

American Water Works Company, Inc.


Otter Tail Corporation

Constructs water and wastewater facilities


Manufactures pipe and waterfront equipment

7/17/08
5/28/08

Brand Energy
MDU Resources Group Inc.

5/8/08
1/14/08

Amount
690.0
135.0

FO
FO

Scaffolding services
Manufactures construction aggregates

300.0
-

IPO
FO

Ormat Technologies Inc.


ITC Holdings Corp.

Piping manufacturer
Energy construction and maintenance services

153.3
280.0

FO
FO

11/21/07
11/14/07

Sterling Construction Co. Inc.


Manitowoc Co. Inc.

Heavy civil construction firm


Manufactures commercial cranes

32.0
157.9

FO
FO

10/22/07
9/20/07

Ormat Technologies Inc.


Layne Christensen Co.

Piping manufacturer
Provides drilling and construction services

140.4
147.2

FO
FO

8/28/07
8/27/07

The Tensar Corp.


American Water Works Company, Inc.

Site development services


Constructs water and wastewater facilities

201.3
1,247.0

IPO
IPO

6/5/07
5/31/07

Orion Marine Group


Artesian Resources Corp.

Marine specialty contractor


Designs water and wastewater infrastructure

213.7
19.2

IPO
FO

4/17/07
4/13/07

Stalion Oilfield Services


MasTec Inc.

Construction and well site services


Specialty contractor

400.0
2.5

IPO
FO

4/11/07
3/8/07

Marmion Industries Corp.


AECOM Technology Corp.

Designs systems for the petrochemical industry


Provides professional support services

0.2
703.0

FO
IPO

3/2/07
2/20/07

KBR, Inc.
Vectren Corp.

Engineering and construction company


Provides underground construction services

3,039.4
130.3

FO
FO

2/9/07
2/6/07

WPCS International Incorporated


ITC Holdings Corp.

Design-build engineering company


Engineering and design services

11.2
362.4

FO
FO

1/17/07
1/16/07

ITC Holdings Corp.


Nova Biosource Fuels, Inc.

Engineering and design services


Offers design-build services

150.0
70.7

FO
FO

Ann. Date

Issuer

Issuer Description

12/2/08
7/16/08

Caterpillar Inc.
Oldcastle, Inc.

Construction & mining equipment


Building materials

6/17/08
5/12/08
4/16/08
12/3/07

Vulcan Materials Company


Harsco Corp.
Martin Marietta Materials Inc.
Vulcan Materials Company

11/6/07
4/13/07

Terex Corp.
MasTec Inc.

Source: Capital IQ

Type

Amount
1,248.4
649.8

Fixed-Income
Fixed-Income

Construction aggregates
Industrial services & engineered products
Construction aggregates
Construction aggregates

649.1
449.5
299.8
1,223.6

Fixed-Income
Fixed-Income
Fixed-Income
Fixed-Income

Construction & infrastructure equipment


Specialty contractor

800.0
150.0

Fixed-Income
Fixed-Income

25

Type

Private Equity Ownership


($ in millions)
Firm
Allied Capital
American Capital Securities

American Securities Capital Partners


APAX Partners
Audax Group

Berkshire Partners
Blue Point Capital Partners
Brazos Private Equity Partners
Chicago Growth Partners
Cleaview Capital Partners
EOS Partners
First Reserve Corporation
Genstar Capital
Graham Partners
Harvest Partners
H.I.G. Capital
Insight Equity
J.H. Whitney & Co.

KRG Capital Partners


Long Point Capital
Olympus Partners
Parallel Investment Partners
PNC Equity Partners
Quintana Capital Group
SunTX Capital Partners
TA Associates
The Jordan Company
The Sterling Group
Thompson Street Capital Partners
Trivest Partners
VentaCore Partners
Wind Point Partners
Wingate Partners

Source: Capital IQ

Holding

Holding Description

Litterer Beteiligungs Gmbh


Infiltrator Systems
CMX
Corrpro Companies
Tensar
PDM Bridge
Contech Construction Products
Infrastructure Services Holdings
Railworks Corporation
Safeworks
The Crom Corporation
Victor Oolitic Stone Company
Advanced Drainage Systems
Apex Companies
WDC Exploration and Wells
The Morton Industrial Group
American Civil Constructors
Hettiner Welding LLC
Greenstar Services Corporation
Brand Energy
Woods Equipment Company
NDS, Inc.
Global Power Equipment Group
DynaSteel
Meadow Valley Construction Co.
AECOM Technology Corp.
EMC Holdings Corp
FNF Construction
The Focus Corporation
Universal Ensco Inc.
Commercial Grading Inc.
Norwesco, Inc.
Builders TradeSource Corp.
Tangent Rail Corporation
Taggart Global
Construction Partners
Cupertino Electric, Inc.
International Mining Machinery
North American Construction Group
North American Energy Partners
Wright Metal Products
CMX, Inc.
Southern Aggregates
Railworks Corporation
United Subcontractors
Corrpro Companies

26

Provides scaffolding services


Septic system products
Offers engineering and consulting services
Provides engineering services to the infrastructure sector
Manufactures proprietary site-development solutions
Produces steel components for bridge structures
Manufactures site solutions products
Civil site contractor
Provides contracting services and rail related products
Provides construction equipment
Manufactures concrete tanks for water storage / treatment
Manufactures limestone products
Manufactures corrugated pipe products
Provides storm / wastewater services
Provides well installation services
Manufacturer of engineered metal components
Provides civil and marine construction and maintenance services
Construction services to the oil and gas industries
Heavy mechanical and specialty contractor
Provides scaffolding services
Construction materials
Water management solutions
Engineering firm
Specialty steel contractor
Heavy construction company
Professional support services
Electrical & mechanical contracting
Heavy highway construction
Engineering firm
Engineering firm
Construction firm
Manufactures tanks for water, agricultural, and septic applications
Infrastructure construction services
Manufactures rail products
Coal processing plants
Infrastructure construction company
Provides electrical infrastructure solutions
Manufactures machinery for the coal mining industry
Provides heavy construction, industrial, and pipeline services
Provides heavy construction, pipeline, and site development services
Designs and manufactures products for the OEM industry
Provides engineering and consulting services
Construction Aggregates
Provides contracting services and rail related products
Offers specialy construction services
Provides engineering services to the infrastructure sector

The Takeaway

Our Conclusion
Similar to the overall market, capital availability for construction related companies has contracted significantly
over the past six months. However, construction related companies that serve the infrastructure market are
expected to benefit significantly from the anticipated stimulus plan.


Recently, share prices of construction related companies that serve the infrastructure market increased 66%.
President-elect Obamas stimulus plan will include a large infrastructure component; however, the longer term
impact on share prices will be determined by the ultimate size of the program and the speed in which it can be put
in place.

Companies are being required to maintain higher cash balances in their businesses as lenders have tightened
leverage ratios and enforce more stringent restrictive covenants. Furthermore, the ability to refinance existing debt
has become tenuous for all but the most credit worthy borrowers.

The maintenance of large cash balances and the structural subordination of additional debt are often
necessary to secure more leverage, assuming that it is available.
Bonding requirements add an additional layer of complexity to financings.

Private equity firms with sizable funds to invest have shown increased interest in the sector. On December 26, 2008
Meadow Valley Corp.s shareholders approved the purchase of the company by Insight Equity. In May 2008 J.H.
Whitney & Co. acquired FNF Construction, Inc., a heavy-highway infrastructure construction company.

Private investments in existing or new infrastructure assets via public private partnerships (PPPs) are likely to
increase as public funding for infrastructure has slowed dramatically over the past decade. The recent PPP between
Citi Infrastructure Investors and Chicagos Midway Airport netted $2.5 billion, an amount that was considerably
higher than expectations.

Capital availability is expected to improve gradually in 2009 as a result of the $700 billion financial bailout plan
passed in late 2008. The easing of the credit markets coupled with the large infrastructure component of the new
administrations stimulus plan is expected to improve infrastructure related construction activity in 2009.
28

Appendix

Company Overviews Construction Companies


Firm / Location

Company Financials

Company Description

Sales: $1,657.6 million

Aecon Group, Inc. is a construction and infrastructure development


company. It operates in four segments: Infrastructure, Buildings,
Industrial, and Concessions. Its services cover all elements of design,
build, operate, procure and finance in the areas of buildings, civil,
industrial, nuclear and utility construction.

EBITDA: $94.7 million


EBIT: $72.2 million
Employees: 1,979

Toronto, ON

Ownership: Public (TSX: ARE)


Sales: $20,966.8 million

Fluor Corporation provides engineering, procurement, construction


management, and project management services. It also provides
consulting services ranging from feasibility studies to process
assessment to project finance structuring and studies. Segments include:
Oil & Gas (58% of revenues); Industrial & Infrastructure (16%);
Government (7%); Global Services (10%); and Power (9%).

EBITDA: $1,099.9 million


EBIT: $937.2 million
Employees: 41,260

Irving, TX

Ownership: Public (NYSE: FLR)


Sales: $2,680.0 million

Granite Construction is a heavy civil contractor and a construction


materials producer for public and private sector clients. The Company
operates through two segments, Granite West and Granite East. Projects
include construction and improvement of streets, roads, highways, and
bridges.

EBITDA: $274.6 million


EBIT: $189.0 million
Employees: 4,200

Watsonville, CA

Ownership: Public (NYSE: GVA)

Sales: $10,518.0 million

KBR, Inc. is an engineering, construction, and services company


supporting energy, petrochemicals, government services, and civil
infrastructure sectors. It operates in six business units: Government and
Infrastructure; Upstream; Services; Downstream; Technology; and
Ventures.

EBITDA: $451.0 million


EBIT: $407.0 million
Employees: 52,000

Houston, TX

Ownership: Public (NYSE: KBR)


Sales: $1,002.3 million

Layne Christensen provides drilling and construction services and


related products to the water infrastructure and mineral exploration
markets. It also produces unconventional natural gas for the energy
market. The company operates in four divisions: Water Infrastructure;
Mineral Exploration; Energy; and Other. The Company offers design,
construction, and maintenance services for municipal and industrial
water systems including water treatment facilities.

EBITDA: $121.4 million


EBIT: $68.7 million

Mission Woods, KS

Employees: 4,300
Ownership: Public (Nasdaq: LAYN)
Source: Capital IQ

30

Company Overviews Construction Companies


Firm / Location

Company Financials

Company Description

Sales: $5,304.1 million

Perini Corporation offers general contracting, construction management,


and design-build services to private clients and public agencies. It also
provides general contracting; preconstruction planning; and project
management services, including planning and scheduling of the
manpower, equipment, materials, and subcontractors required for a
project. The Company operates in three segments: Building; Civil; and
Management Services.

EBITDA: $179.9 million


EBIT: $167.8 million
Employees: 4,100

Framingham, MA

Ownership: Public (NYSE: PCR)


Sales: $394.1 million

Sterling Construction Company operates as a heavy civil construction


company. It specializes in the building, reconstruction, and repair of
transportation and water infrastructure. The Company also provides
general contracting services, including excavating, concrete and asphalt
paving, pipe installation, and concrete placement primarily to public
sector clients.

EBITDA: $42.6 million


EBIT: $30.0 million
Employees: 1,200

Houston, TX

Ownership: Public (Nasdaq: STRL)


Sales: $9,117.4 million

URS Corporation provides engineering, construction, and technical


services. It offers a range of program management; planning, design,
and engineering; systems engineering and technical assistance;
construction and construction management; operations and
maintenance; and decommissioning and closure services to federal
government, state and local government agencies, as well as to private
industry and international clients.

EBITDA: $486.7 million


EBIT: $359.0 million
Employees: 50,000

San Francisco, CA

Ownership: Public (NYSE: URS)

Sales: $1,787.5 million

Willbros Group, Inc. provides engineering, construction, and specialty


services to oil, gas, power, refinery, and petrochemical industries, and
government entities. The Company focuses on pipelines and associated
facilities for onshore and coastal locations. Its engineering services
include feasibility studies, conceptual engineering, design, route/site
selection, construction management, etc.

EBITDA: $156.0 million


EBIT: $114.6 million
Employees: 5,475

Panama City, Panama

Ownership: Public (NYSE: WG)

Source: Capital IQ

31

Company Overviews Aggregates / Cement Producers


Firm / Location

Company Financials

Company Description
CEMEX produces, distributes, markets, and sells cement, ready-mix
concrete, aggregates, and other construction materials. The Company
sells its products primarily to distributors in the construction industry.
The Company has operations in over 50 countries.

Sales: $22,462.9 million


EBITDA: $4,536.0 million
EBIT: $2,641.3 million
Employees: 50,000

N.L. Mexico

Ownership: Public (NYSE: CX)

Eagle Materials engages in the manufacture, distribution, and sale of


gypsum wallboard and cement. Its products include gypsum wallboard,
portland cement, recycled paperboard, and concrete and aggregates.
The Company sells its products to build and renovate residential,
commercial, and industrial structures, as well as to build and improve
roads and bridges.

Sales: $669.5 million


EBITDA: $112.5 million
EBIT: $63.3 million
Employees: 1,600

Dallas, TX

Ownership: Public (NYSE: EXP)


Sales: $23,323.5 million

Holcim, Ltd. Produces and distributes cement products. It offers


portland cement and cementitious materials, as well as blends for
special applications. The Company also provides aggregates, including
crushed stone, gravel, and sand, which are primarily used in
manufacturing ready-mix concrete, concrete products, and asphalt, as
well as for road building and railway tracks.

EBITDA: $5,320.3 million


EBIT: $3,707.7 million
Employees: 89,364

Jona, Switzerland

Ownership: Public (VIRTX: HOLN)

Martin Marietta Materials engages in the production and sale of


aggregates for the construction industry. It operates in two segments,
Aggregates and Specialty Products. Its products have various uses,
including flame retardants, wastewater treatment, pulp and paper
production, and other environmental applications. The Company also
develops structural composite products.

Sales: $2,193.4 million


EBITDA: $511.2 million
EBIT: $346.3 million
Employees: 5,300

Raleigh, NC

Ownership: Public (NYSE: MLM)

Texas Industries, Inc. supplies heavy construction materials. The


company operates in three segments: Cement; Aggregates; and
Consumer Products. The Company serves various end-use markets,
such as public works, residential, commercial, retail, and industrial and
institutional construction sectors, as well as energy markets.

Sales: $1,021.8 million


EBITDA: $148.2 million
EBIT: $89.1 million

Dallas, TX

Employees: 2,500
Ownership: Public (NYSE: TXI)
Source: Capital IQ

32

Company Overviews Aggregates / Cement Producers


Firm / Location

Company Financials

Company Description

Sales: $4,102.3 million

Trinity Industries provides various products and services for the


industrial, energy, transportation, and construction sectors. Its
Construction Products group produces concrete, aggregates, and
asphalt; manufactures highway products, as well as beams and girders
used in highway bridge construction; and distributes construction
aggregates, such as crushed stone, sand and gravel, asphalt rock, and
recycled concrete.

EBITDA: $721.3 million


EBIT: $585.3 million
Employees: 14,400

Dallas, TX

Ownership: Public (NYSE: TRN)


Sales: $779.7 million

U.S. Concrete produces and sells ready-mixed concrete, precast concrete


products, and concrete-related products in select markets. It operates in
two segments: Ready-Mixed Concrete and Concrete-Related Products;
and Precast Concrete Products.

EBITDA: $50.8 million


EBIT: $21.4 million
Employees: 2,777

Houston, TX

Ownership: Public (Nasdaq: RMIX)


Sales: $144.0 million

United States Lime & Minerals manufactures and sells lime and
limestone products. It extracts limestone from open-pit and
underground quarries, and processes it for sale as pulverized limestone,
quicklime, hydrated lime, and lime slurry. The Company sells its lime
and limestone products to highway, street and parking lot contractors,
steel producers, municipal sanitation and water treatment facilities, etc.

EBITDA: $38.2 million


EBIT: $24.7 million
Employees: 318

Dallas, TX

Ownership: Public (Nasdaq: USLM)

Sales: $3,709.1 million

Vulcan Materials Company produces construction aggregates and other


construction materials. The Company operates in three segments:
Aggregates; Asphalt mix and Concrete; and Cement. The Companys
customers include asphalt mix and ready-mixed concrete producers,
concrete products producers, construction contractors, road / highway
contractors, nonresidential building contractors, residential contractors,
and precast / pre-stressed concrete producers.

EBITDA: $862.5 million


EBIT: $490.6 million
Employees: 10,522

Birmingham, AL

Ownership: Public (NYSE: VMC)

Source: Capital IQ

33

Company Overviews Construction Equipment Manufacturers


Firm / Location

Company Financials

Company Description

Sales: $999.0 million

Astec Industries provides equipment and components used primarily in


road building, utility, and related construction activities. It operates in
four segments: Asphalt Group; Aggregate and Mining Group; Mobile
Asphalt Paving Group; and Underground Group. The Company offers
its products to highway and heavy equipment contractors, open mine
operators, quarry operators, governmental agencies, etc.

EBITDA: $119.1 million


EBIT: $102.3 million
Employees: 3,886

Chattanooga, TN

Ownership: Public (Nasdaq: ASTE)


Sales: $47,284.0 million

Caterpillar manufactures and sells construction and mining equipment,


diesel and natural gas engines, and industrial gas turbines. Its
machinery business includes the design, manufacture, marketing, and
sale of construction, mining, and forestry machinery, such as tractors,
loaders, pipelayers, motor graders, excavators, backhoe loaders, etc.

EBITDA: $7,195.0 million


EBIT: $5,246.0 million
Employees: 112,104

Peoria, IL

Ownership: Public (NYSE: CAT)


Sales: $17,781.0 million

CNH Global manufactures, markets, and distributes a range of


agricultural and construction equipment. It operates in three segments:
Agricultural Equipment; Construction Equipment; and Financial
Services. The Company markets its products globally through its two
brand families: Case and NewHolland.

EBITDA: $2,558.0 million


EBIT: $2,253.0 million
Employees: 28,100

Amsterdam, Netherlands

Ownership: Public (NYSE: CNH)

Deere & Company engages in the manufacture and distribution of


products and services for the agriculture and forestry markets. It
operates in four segments: Agricultural Equipment, Commercial and
Consumer Equipment, Construction and Forestry, and Credit.

Sales: $25,803.5 million


EBITDA: $3,646.8 million
EBIT: $3,123.8 million
Employees: 56,653

Moline, IL

Ownership: Public (NYSE: DE)

The Manitowoc Company manufactures and sells cranes. The company


operates in three segments: Cranes and Related Products (Crane);
Foodservice Equipment (Foodservice); and Marine. The Crane segment
offers lattice-boom crawler cranes, mobile telescopic cranes, tower
cranes, and boom trucks. This segment markets its products under the
Manitowoc, Grove, Potain, and National brand names.

Sales: $4,653.3 million


EBITDA: $704.1 million
EBIT: $611.6 million
Employees: 10,460

Manitowoc, WI

Ownership: Public (NYSE: MTW)


Source: Capital IQ

34

Company Overviews Construction Equipment Manufacturers


Firm / Location

Company Financials

Company Description

Sales: $10,399.5 million

Terex Corporation manufactures capital equipment for construction,


infrastructure, quarrying, mining, shipping, transportation, refining, and
utility industries. Its products include material lifts, portable aerial work
platforms, trailer-mounted articulating booms, self-propelled
articulating and telescopic booms, scissor lifts, telehandlers, construction
trailers, and replacement parts.

EBITDA: $1,130.2 million


EBIT: $1,034.3 million
Employees: 20,600

Westport, CT

Ownership: Public (NYSE: TEX)

Source: Capital IQ

35

Company Overviews Specialty Construction Services


Firm / Location

Company Financials

Company Description

Sales: $5,754.7 million

Chicago Bridge & Iron operates as an engineering, and procurement and


construction company. It offers conceptual design, engineering,
procurement, fabrication, construction, commissioning, and related
maintenance services. In addition, the Company constructs steel
structures, including above ground storage tanks, elevated storage
tanks, pressure vessels, and other specialty structures, such as
processing facilities for oil and gas companies.

EBITDA: $4.9 million


EBIT: -$68.2 million
Employees: 17,295

The Woodlands, TX

Ownership: Public (NYSE: CBI)


Sales: $3,737.7 million

Dycom Industries provides specialty contracting services. The


Companys contracting services include engineering, construction,
maintenance, and installation services to telecommunications providers;
underground facility locating services to various utilities, including
telecommunications providers; and other construction and maintenance
services to electric utilities and others.

EBITDA: $388.3 million


EBIT: $271.2 million
Employees: 15,261

Palm Beach Gardens, FL

Ownership: Public (NYSE: PWR)


Sales: $6,872.4 million

EMCOR Group provides electrical and mechanical construction and


facilities services. It engages in the design, integration, installation, startup, operation, and maintenance of various electrical and mechanical
systems, including electric power transmission and distribution systems,
such as power cables, conduits, distribution panels, transformers,
generators, uninterruptible power supply systems, and related switch
gear and controls.

EBITDA: $349.2 million


EBIT: $296.0 million
Employees: 29,000

Norwalk, CT

Ownership: Public (NYSE: EME)

Sales: $529.4 million

Insituform Technologies provides proprietary trenchless technologies to


rehabilitate, replace, maintain, and install underground pipes. It
operates in two segments, Rehabilitation and Tite Liner. Most of the
Companys installation operations are contracts for municipal entities.

EBITDA: $43.6 million


EBIT: $26.3 million
Employees: 1,600

Chesterfield, MO

Ownership: Public (Nasdaq: INSU)


Sales: $818.3 million

Integrated Electrical Services provides electrical contracting services to


commercial, industrial, and residential customers. Its services include
designing, building, maintaining, and servicing electrical, data
communications, and utilities systems. The Company offers its services
primarily to general contractors, property managers and developers,
corporations, government agencies and municipalities, and
homeowners.

EBITDA: $22.4 million


EBIT: $14.5 million
Employees: 4,938

Houston, TX

Ownership: Public (Nasdaq: IESC)


Source: Capital IQ

36

Company Overviews Specialty Construction Services


Firm / Location

Company Financials

Company Description

Sales: $1,238.4 million

MasTec, Inc. operates as a specialty contractor. Its operations include


building, installation, maintenance, and upgrade of communications
and utility infrastructure. The Company primarily builds underground
and overhead distribution systems, such as trenches, conduits, power
lines, and pipelines that are used in its customers networks that provide
communications and power delivery.

EBITDA: $138.1 million


EBIT: $113.3 million
Employees: 7,800

Coral Gables, FL

Ownership: Public (NYSE: MTZ)


Sales: $619.2 million

MYR Group, Inc. provides electrical systems construction services. The


Company offers constructs power lines, traffic and rail signals, power
plants, and boilers. Additionally, it provides electrical system wiring
and telecommunications systems installation, fabrication,
instrumentation, and system maintenance services.

EBITDA: $28.7 million


EBIT: $18.1 million
Employees: 3,000

Rolling Meadows, IL

Ownership: Public (Nasdaq: MYRG)


Sales: $3,737.7 million

Quanta Services offers various network solutions to the electric power,


gas, telecommunications, cable television, and specialty services
industries, as well as to the commercial, industrial, and governmental
entities. Further, the Company engages in leasing point-to-point
telecommunications infrastructure.

EBITDA: $388.3 million


EBIT: $271.2 million
Employees: 15,261

Houston, TX

Ownership: Public (NYSE: PWR)

Source: Capital IQ

37

Company Overviews Infrastructure Product Manufacturers


Firm / Location

Company Financials

Company Description
Ameron International Corporation manufactures and sells engineered
products and materials for the chemical, industrial, energy,
transportation, and infrastructure industries. It operates in three
segments: Fiberglass-Composite Pipe; Water Transmission; and
Infrastructure Products. The Company manufactures fiberglass pipe,
concrete pipe, fabricated steel products, and lighting and traffic poles.

Sales: $668.5 million


EBITDA: $67.3 million
EBIT: $47.4 million
Employees: 2,600

Pasadena, CA

Ownership: Public (NYSE: AMN)


Sales: $482.8 million

L. B. Foster Company manufactures, fabricates, and distributes products


and services for the rail, construction, energy, and utility markets. It
operates in three segments: Rail Products (rail, track work, and
accessories); Construction Products (sheet metal piling, pipe piling,
bridge decking, expansion joints, precast concrete); and Tubular
Products (pipe coatings and threadpipe products).

EBITDA: $50.3 million


EBIT: $41.4 million
Employees: 655

Pittsburgh, PA

Ownership: Public (Nasdaq: FSTR)

Northwest Pipe Company manufactures and markets large-diameter,


high-pressure steel pipeline systems for use in water infrastructure
applications, primarily related to drinking water systems. Its pipeline
systems are also used for hydroelectric power systems, wastewater
systems, and other applications. The Company also manufactures and
markets smaller diameter, electric resistance welded steel pipe.

Sales: $427.7 million


EBITDA: $58.4 million
EBIT: $53.2 million
Employees: 1,260

Vancouver, WA

Ownership: Public (Nasdaq: NWPX)

Sales: $1,859.3 million

Mueller Water Products, Inc. manufacturers and markets various water


infrastructure and flow control products for use in water distribution
networks and facilities. It operates three segments: Mueller Co. (valves,
fire hydrants); U.S. Pipe (pipes, restraint joints); and Anvil (pipe fittings,
pipe hangers, and supports). It sells its products to commercial
contractors through distributors.

EBITDA: $257.5 million


EBIT: $164.4 million
Employees: 6,500

Atlanta, GA

Ownership: Public (NYSE: MWA)


Sales: $1,799.1 million

Valmont Industries, Inc. produces fabricated metal products, metal and


concrete pole and tower structures, and mechanized irrigation systems.
The Company operates through four segments: Engineered Support
Structures, Utility Support Structures, Coatings, and Irrigation. It serves
state and federal governments, contractors, utility and
telecommunications companies, manufacturers of commercial lighting
fixtures, and large farms, as well as general manufacturing.

EBITDA: $254.2 million


EBIT: $215.7 million
Employees: 6,029

Omaha, NE

Ownership: Public (NYSE: VMI)


Source: Capital IQ

38

Potrebbero piacerti anche