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1
January 2017
E n e r g y E q u i p m e n t & S e r v i c e s
Industry Insights and Happenings
2
Report SummaryINDUSTRY COMMENTARY
• Crude prices have been largely range-bound in the low $50s since OPEC announced coordinated production cuts in early December 2016
– Market continues to monitor for OPEC compliance with cuts
– Recent rumors of key OPEC countries open-ness to extending cuts by 6 months have boosted sentiment
– As U.S. production has rebounded, some analysts express concern over long-term price ceiling
• US Rig counts continue to improve
– Total rig count up 72% on lows reached in late May 2016
• Continued uncertainty regarding U.S. energy policy and regulatory environment
– Prospective pullback in support for renewables could prompt additional state-level action
TABLE OF CONTENTS:
• Recent Transactions
• Articles We Enjoyed
• Commodity Prices
• Rig Counts
• Public Comparables
CONTACTS:
Ted KinsmanManaging [email protected](303) 572-6013
Samuel L. Hill Managing Directorhill@headwatersmb. com214.457.4832
Tim McEuenSenior Vice [email protected](303) 962-5778
Luis Moya Senior Vice [email protected]
www.headwatersmb.com
Source: Capital IQ
% of High % of Low 6 Mos. Ago Current 2017E 2018P
Oilfield Services & EqupmentLarge-Cap 94% 154% 12.5x 20.3x 20.4x 16.9xMid-and Small-Cap 90% 219% 8.9x 11.4x 11.8x 14.1xOil & Gas Equipment 93% 169% 10.4x 11.8x 13.5x 12.7xLand Drillers 93% 240% 6.3x 18.6x 19.2x 16.8x
Power Services & EqupmentLarge-Cap 99% 144% 9.5x 11.6x 11.3x 11.1xMid- and Small-Cap 95% 141% 10.3x 13.1x 13.1x 12.7xClean Tech and Solar 85% 138% 11.0x 10.1x 12.3x 9.6x
Infrastructure & Industrial ServicesLarge-Cap Infrastructure 91% 140% 6.2x 9.3x 9.6x 8.7xMid- and Small-Cap Infrastructure 89% 148% 7.7x 9.2x 8.7x 7.4xUtility Services 91% 210% 10.9x 11.6x 8.9x 7.8xIndustrial Services 88% 156% 7.0x 10.4x 9.9x 8.5x
Forward MultiplesEV/EBITDA52-Week Perf.
LTM MultiplesEV/LTM EBITDA as of
Stock Performance
3
Industry UpdateRECENT TRANSACTIONS
Source: Capital IQ
Date Seller/Target Description AcquirerJan-17 Exclusive Energy
ServicesChemical mixing and delivery for coil tubing, work-over, and fracjobs in oil and gas industry
Greenwell Energy Solutions
Jan-17 OilPatch Technologies Focuses on definition, specification, design, analysis, manufacture, and testing of subsea and production development systems
Dril-Quip Inc.
Dec-16 Frontier Integrity Solutions
Offers oil and gas pipeline inspection and integrity services to U.S. pipeline operators
Atar Capital
Dec-16 Seventy Seven Energy Provides a diversified range of wellsite services and equipment to land-based E&P companies
Patterson-UTI Energy
Dec-16 Kemper Valve & Fittings
Manufactures, supplies, and sells pressure pipe unions and related oilfield fluid control products
Caterpil lar Oil & Gas
Nov-16 C.I. Agent Solutions Designs, manufactures, and installs secondary containment solutions and oil containment systems
Justrite Manufacturing Co.
Nov-16 Smartworks Oilfield Maintenance
Operates oilfield service trucks and provides maintenance services for oil and gas drilling rigs and pumping and hydraulic equipment
Petrocapita Processing
Nov-16 Stewart Tubular Products
Manufactures downhole tubular accessories and support equipment for the oil and gas industry
Aterian Investment Partners
Nov-16 Top-Co Products Designs, manufactures, and distributes float equipment, casing cementing equipment, and accessories for the oil and gas industry
Rubicon OilfieldInternational
Oct-16 Animas Well Services Workover rigs, fishing tools, coiled-tubing units, and P&A services Cogent Energy Solutions
Oct-16 Blackhawk Group Designs, manufactures, rents, and sells cementing equipment and products
Frank’s International
Sep-16 Kel-Tech and X-Chem Manufacturer and supplier of specialty chemical products and specialty oilfield chemicals
Clariant
Sep-16 US Rotary Dril l ing Tools
Processing of oil and gas tubular goods Tubos Reunidos
Sep-16 John Crane Production Solutions
Designs, installs, services, and repairs downhole rod pumps and fiberglass and steel sucker rods
Endurance Lift Solutions
Sep-16 Extreme Plastics Plus Environmental l inings, above-ground storage tanks, secondarysteel wall containment systems, rig mats, and rig vacs
BW EPP Holdings
Sep-16 Applied-Cleveland Holdings
Third-party inspection services for oil and gas transmission and distribution systems and other similar facilities
First Reserve
Sep-16 Top Notch Energy Services
Thru-tubing fishing and milling services to the oil and gas industry Team Oil Tools
4
Rig Counts | Permian Activity Continuing to Pick Up
“After two years of being battered by low commodity prices, the Permian Basin oil and gas industry is showing increased signs of recovery. Although November’s Texas Permian Basin Petroleum Index figures came in 17.5 percent below November 2015 levels, Amarillo Economist Karr Ingham, who prepares the index, said the index was higher than October levels and has shown month-over-month increases three out of the last four months. Strengthening commodity prices have helped lift the area’s oil and gas economy in recent months.”
Hearst Communications | Permian Oil Fields Continue to Re-cord Rising Activity Levels
Oil Production | OPEC Cuts Unlikely to Last Beyond June
“OPEC probably won’t need to prolong output cuts beyond the agreed six-month term given the level of compliance with the reductions and the outlook for an increase in global con-sumption, Saudi Minister of Energy and Industry Khalid Al-Fa-lih said. “Based on my judgment today, I think it’s unlikely that we will need to continue” production curbs beyond June be-cause the market will have rebalanced, Al-Falih told reporters in Abu Dhabi. Even so, OPEC will reassess the situation when it meets again in May and “all players have indicated their will-ingness to extend, if necessary,” he said.
Bloomberg | Saudis Say Output Cuts Unlikely to Last Beyond June
Renewables Investment | National Grid Partners with SunRun
“National Grid, which operates electricity networks in Britain and the US, is making its first move into solar power with a $100m investment in a partnership with Sunrun, the largest independent rooftop solar company in the US. The joint ven-ture will sell solar power systems to homes and businesses, and develop products and services for a power grid adapting to a new model of smallscale local generation. The deal is the latest example of how electric utilities are reassessing their businesses as the industry shifts from a traditional model of largescale centralised generation to one in which many more businesses and homes produce and store their own power.”
Financial Times | National Grid Invests $100m in US Solar Venture
Power Prices | 2016 Prices Fall Due to Low Natural Gas Prices
“Average wholesale electricity prices fell across the United States during 2016, mostly due to the sustained lower cost of natural gas. The U.S. Energy Information Administration’s report indicated monthly prices ranged from $20 to $45 per MWh. Natural gas prices averaged $2.78 per million Btus, or 17 percent lower than 2015 for the first 10 months of 2016. Milder winter weather in early 2016 kept costs low during that period. Because of the lower cost, natural gas became the top source of U.S electricity generation on an annualized basis for the first time. An estimated 34 percent of power came from natural gas, compared to 30 percent from coal."
Power Engineering | Federal Judge Orders EPA to Assess Job Losses From Clean Air Act Actions
U.S. Drilling | Activity Projected to Continue Ramping Up
“Drillers will have to begin pouring cash back into oil fields around the world by the end of the year to prevent a global oil-production shortage in coming years, the CEO of Schlum-berger said Friday. That’s why the world’s top oil field services company is gearing up for a global recovery in oil and gas drill-ing. In a bid for higher service prices, the company recently began renegotiating contracts for hydraulic fracturing and directional drilling technology in the United States, one of the first signs of a new investment cycle in the oil industry.”
FuelFix | Schlumberger Chief: Drilling Recovery “Is On Its Way in All Markets”
ARTICLES WE ENJOYED
5
COMMENTARY: • Crude has been range-bound in the low
$50s since OPEC’s announcement of a production-limiting deal
– Long-term concern over prices being effectively capped by U.S. unconventional mobilization
– Rig counts continued to run higher, up 72% since its low in May 2016
– Inventories remain elevated, as the market waits on reports of OPEC compliance with cuts
– U.S. crude production has begun to rebound in response to higher commodity prices, trailing rig count recovery, at 8.95m barrels – the highest in 9 months
1 Year WTI and Henry Hub Prices
Source: Capital IQ
• U.S. crude stocks added more than 4m barrels week-over-week as PADD III imports jumped to a 4-year high, offsetting modest declines in PADD II and at Cushing
• Traders largely held steady in the crude market, but repositioned in refined products, with net length rising substantially in RBOB and heating oil
COMMODITY PRICE UPDATE
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Jan-
16
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17
Crude (left) Natural Gas (right)
6
U.S. Rig Count International Rig Count
U.S. Directional vs. VerticalU.S. Oil vs. Gas Rig Count
U.S. Rig Count by Play
Source: Baker Hughes
RIG COUNT UPDATE
0
500
1,000
1,500
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2,500
Jan-
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U.S. Rigs
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International Rigs
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Horizontal + Directional Vertical
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Feb-
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Other Permian Williston Marcellus-Utica Eagle Ford Haynesville
7
Public ComparablesLARGE-CAP OILFIELD SERVICES
5-Year Trading vs. S&P 5001-Year Trading vs. S&P 500
Historical EV/LTM EBITDA (Annual Averages)
Source: Capital IQ
Market Data
Stock Performance LTM Multiple Evolution Forward Multiples
$000s Change From 52-Week Performance EV/LTM EBITDA as of EV/EBITDA
Mkt. Cap EV 1 Month 1 Year % of High % of Low 1 Yr. Ago 6 Mos. Ago Current 2017E 2018P Large-Cap Oilfield Services
Schlumberger Limited $120,763 $131,122 0% 42% 98% 137% 11.5x 12.1x 20.3x 20.4x 17.3x Halliburton Company $49,049 $57,417 3% 98% 99% 202% 10.6x 12.5x na na 16.6x Baker Hughes Incorporated $26,269 $25,555 (4%) 59% 90% 162% 10.6x 17.9x na na 17.3x Weatherford International plc $5,317 $12,369 9% (3%) 64% 145% 12.3x na na na 15.8x
Min (4%) (3%) 64% 137% 10.6x 12.1x 20.3x 20.4x 15.8x Median 2% 51% 94% 154% 11.0x 12.5x 20.3x 20.4x 16.9x Max 9% 98% 99% 202% 12.3x 17.9x 20.3x 20.4x 17.3x
0%
50%
100%
150%
200%
Jan-
16
Feb-
16
Mar
-16
Apr-
16
May
-16
Jun-
16
Jul-1
6
Aug-
16
Sep-
16
Oct
-16
Nov
-16
Dec
-16
Jan-
17
La rge-Cap Oilfield Services +57.6% S&P 500 +22.2%
0%
50%
100%
150%
200%
Jan-
12
Jun-
12
Nov
-12
Apr-
13
Sep-
13
Feb-
14
Jul-1
4
Dec
-14
May
-15
Oct
-15
Mar
-16
Aug-
16
La rge-Cap Oilfield Services +7.4% S&P 500 +71.3%
10-year avg: 11.4x 5-year avg: 12.9x 2-year avg: NM
10.6x 9.4x
6.4x
11.4x 10.8x
6.8x 8.1x
9.5x 7.6x
NM NM
0.0x
5.0x
10.0x
15.0x
20.0x
25.0x
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD
8
Market Data
5-Year Trading vs. S&P 5001-Year Trading vs. S&P 500
Historical EV/LTM EBITDA (Annual Averages)
Source: Capital IQ
MID-CAP OILFIELD SERVICES
Stock Performance LTM Multiple Evolution Forward Multiples
$000s Change From 52-Week Performance EV/LTM EBITDA as of EV/EBITDA
Mkt. Cap EV 1 Month 1 Year % of High % of Low 1 Yr. Ago 6 Mos. Ago Current 2017E 2018P Mid-Cap Oilfield Services
Superior Energy Services, Inc. $2,740 $3,746 7% 100% 91% 219% 7.0x 12.8x na na 19.1x TETRA Technologies, Inc. $571 $1,364 (10%) (18%) 58% 105% 7.8x 8.9x 12.2x 11.9x 9.1x Ensign Energy Services Inc. $1,445 $2,115 (2%) 52% 90% 199% 5.7x 7.3x 10.5x 11.7x 9.1x Calfrac Well Services Ltd. $653 $1,514 2% 303% 89% 448% 10.0x na na na 23.8x Trican Well Service Ltd. $1,007 $1,172 16% 750% 94% 708% 12.5x na na na na
Min (10%) (18%) 58% 105% 5.7x 7.3x 10.5x 11.7x 9.1x Median 2% 100% 90% 219% 7.8x 8.9x 11.4x 11.8x 14.1x Max 16% 750% 94% 708% 12.5x 12.8x 12.2x 11.9x 23.8x
0%
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Jan-
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17
Mid-Cap Oilfie ld Services +89.6% S&P 500 +22.2%
0%
50%
100%
150%
200%
Jan-
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12
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13
Sep-
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Feb-
14
Jul-1
4
Dec
-14
May
-15
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-16
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Mid-Cap Oilfie ld Services -43.9% S&P 500 +71.3%
10-year avg: 10.8x 5-year avg: 13.1x 2-year avg: NM
7.6x 8.4x 6.0x
10.5x 7.9x
6.4x 8.8x
11.1x
6.8x
NM
NM
0.0x
5.0x
10.0x
15.0x
20.0x
25.0x
30.0x
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD
9
5-Year Trading vs. S&P 5001-Year Trading vs. S&P 500
Historical EV/LTM EBITDA (Annual Averages)
Source: Capital IQ
OIL & GAS EQUIPMENT
Market DataStock Performance LTM Multiple Evolution Forward Multiples
$000s Change From 52-Week Performance EV/LTM EBITDA as of EV/EBITDA
Mkt. Cap EV 1 Month 1 Year % of High % of Low 1 Yr. Ago 6 Mos. Ago Current 2017E 2018P Oil & Gas Equipment
National Oilwell Varco, Inc. $14,760 $16,466 1% 31% 90% 152% 6.5x 12.8x na na na FMC Corporation $8,098 $9,944 5% 73% 99% 187% 14.2x 9.9x 14.8x 13.9x 12.7x Oil States International, Inc. $2,055 $2,068 2% 60% 96% 187% 7.9x 10.9x na na na Dril-Quip, Inc. $2,378 $1,836 3% 20% 91% 135% 7.9x 7.3x 8.8x 13.1x na
Min 1% 20% 90% 135% 6.5x 7.3x 8.8x 13.1x 12.7x Median 3% 46% 93% 169% 7.9x 10.4x 11.8x 13.5x 12.7x Max 5% 73% 99% 187% 14.2x 12.8x 14.8x 13.9x 12.7x
0%
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17
Oil & Ga s Equipment +45.6% S&P 500 +22.2%
0%
50%
100%
150%
200%
Jan-
12
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14
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Dec
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May
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Mar
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16
Oil & Ga s Equipment -19.4% S&P 500 +71.3%
10-year avg: 10.0x 5-year avg: 10.0x 2-year avg: NM
9.5x 8.7x
5.7x
8.6x 10.7x
9.8x 10.8x
9.9x
6.7x
12.0x
NM
0.0x2.0x4.0x6.0x8.0x
10.0x12.0x14.0x16.0x18.0x20.0x
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD
10
5-Year Trading vs. S&P 5001-Year Trading vs. S&P 500
Historical EV/LTM EBITDA (Annual Averages)
Source: Capital IQ
LAND DRILLERS
Market DataStock Performance LTM Multiple Evolution Forward Multiples
$000s Change From 52-Week Performance EV/LTM EBITDA as of EV/EBITDA
Mkt. Cap EV 1 Month 1 Year % of High % of Low 1 Yr. Ago 6 Mos. Ago Current 2017E 2018P Land Drillers
Nabors Industries Ltd. $5,018 $8,294 5% 218% 96% 329% 5.9x 8.8x 18.7x 13.7x 11.6x Helmerich & Payne, Inc. $8,558 $8,100 (2%) 82% 91% 178% 5.5x 6.0x 13.8x 21.1x 22.4x Patterson-UTI Energy, Inc. $4,131 $4,708 2% 137% 93% 240% 4.8x 6.0x 18.6x 24.3x 17.5x Precision Drilling Corporation $2,270 $3,923 4% 95% 94% 227% 7.7x 11.6x na 17.3x 12.4x Pioneer Energy Services Corp. $467 $857 (2%) 475% 85% 592% 4.8x 6.3x na na 16.8x
Min (2%) 82% 85% 178% 4.8x 6.0x 13.8x 13.7x 11.6x Median 2% 137% 93% 240% 5.5x 6.3x 18.6x 19.2x 16.8x Max 5% 475% 96% 592% 7.7x 11.6x 18.7x 24.3x 22.4x
0%50%
100%150%
200%250%300%
Jan-
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May
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Jul-1
6
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Jan-
17
La nd Drillers +151.1% S&P 500 +22.2%
0%
50%
100%
150%
200%
Jan-
12
Jun-
12
Nov
-12
Apr-
13
Sep-
13
Feb-
14
Jul-1
4
Dec
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May
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Oct
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Mar
-16
Aug-
16
La nd Drillers +7.6% S&P 500 +71.3%
10-year avg: 7.6x 5-year avg: 8.9x 2-year avg: NM
4.7x 5.7x 4.2x
8.5x 7.5x
4.4x 5.3x 6.1x 4.2x
NM
NM
0.0x
5.0x
10.0x
15.0x
20.0x
25.0x
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD
11
5-Year Trading vs. S&P 5001-Year Trading vs. S&P 500
Historical EV/LTM EBITDA (Annual Averages)
Source: Capital IQ
LARGE-CAP POWER SERVICES & EQUIPMENT
Market DataStock Performance LTM Multiple Evolution Forward Multiples
$000s Change From 52-Week Performance EV/LTM EBITDA as of EV/EBITDA
Mkt. Cap EV 1 Month 1 Year % of High % of Low 1 Yr. Ago 6 Mos. Ago Current 2017E 2018P Large-Cap Power Services & Equipment
Siemens Aktiengesellschaft $94,498 $112,436 2% 45% 99% 147% 10.2x 9.6x 11.4x 10.9x 10.2x Honeywell International Inc. $91,232 $98,493 1% 22% 98% 122% 11.2x 9.5x 12.6x 12.4x 11.4x ABB Ltd $48,763 $51,119 6% 42% 100% 143% 9.9x 9.2x 11.6x 11.2x 10.4x Schneider Electric S.E. $39,404 $45,079 3% 47% 100% 149% 12.2x 9.1x 11.6x 11.5x 10.7x Emerson Electric Co. $37,973 $41,437 3% 38% 99% 139% 13.8x 11.8x 11.2x 11.1x 13.1x Eaton Corporation plc $30,783 $38,526 0% 43% 97% 144% 11.7x 10.0x 11.8x 11.8x 11.5x
Min 0% 22% 97% 122% 9.9x 9.1x 11.2x 10.9x 10.2x Median 3% 43% 99% 144% 11.5x 9.5x 11.6x 11.3x 11.1x Max 6% 47% 100% 149% 13.8x 11.8x 12.6x 12.4x 13.1x
0%
50%
100%
150%
Jan-
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Feb-
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Mar
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Apr-
16
May
-16
Jun-
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Jul-1
6
Aug-
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Sep-
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Oct
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Nov
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Dec
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Jan-
17
La rge-Cap Power Services & Equipment +35.9%
S&P 500 +22.2%
0%50%
100%150%
200%
Jan-
12
Jun-
12
Nov
-12
Apr-
13
Sep-
13
Feb-
14
Jul-1
4
Dec
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May
-15
Oct
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Mar
-16
Aug-
16
La rge-Cap Power Services & Equipment +49.1%
S&P 500 +71.3%
10-year avg: 9.9x 5-year avg: 10.6x 2-year avg: 10.9x
10.9x
8.6x 7.3x
9.7x 9.2x 9.0x
10.9x 10.9x 10.1x 10.5x
12.0x
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
14.0x
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD
12
5-Year Trading vs. S&P 5001-Year Trading vs. S&P 500
Historical EV/LTM EBITDA (Annual Averages)
Source: Capital IQ
MID-CAP POWER SERVICES & EQUIPMENT
Market Data
Stock Performance LTM Multiple Evolution Forward Multiples
$000s Change From 52-Week Performance EV/LTM EBITDA as of EV/EBITDA
Mkt. Cap EV 1 Month 1 Year % of High % of Low 1 Yr. Ago 6 Mos. Ago Current 2017E 2018P Mid-Cap Power Services & Equipment
AMETEK, Inc. $11,812 $13,521 3% 9% 97% 119% 12.8x 13.1x 13.2x 13.7x 13.2x Hubbell Incorporated $6,569 $7,187 (0%) 36% 98% 141% 10.4x 8.8x 12.1x 12.5x 12.0x Valmont Industries, Inc. $3,182 $3,590 (3%) 39% 90% 141% 9.7x 8.9x 11.9x 10.8x 10.0x Littelfuse, Inc. $3,414 $3,656 (2%) 59% 95% 158% 12.2x 9.9x 17.3x 15.8x 14.1x AZZ incorporated $1,527 $1,825 (10%) 20% 86% 125% 9.1x 9.2x 11.2x 10.9x 11.7x Badger Meter, Inc. $1,102 $1,141 (1%) 40% 94% 142% 15.3x 13.0x 15.5x 15.8x 14.2x ESCO Technologies Inc. $1,451 $1,507 (2%) 72% 96% 175% 12.7x 10.7x 14.9x 15.1x 12.2x Thermon Group Holdings, Inc. $628 $638 (3%) 20% 88% 138% 10.9x 11.3x 12.9x 10.1x 14.6x
Min (10%) 9% 86% 119% 9.1x 8.8x 11.2x 10.1x 10.0x Median (2%) 37% 95% 141% 11.5x 10.3x 13.1x 13.1x 12.7x Max 3% 72% 98% 175% 15.3x 13.1x 17.3x 15.8x 14.6x
0%
50%
100%
150%
Jan-
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Mar
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May
-16
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Jul-1
6
Aug-
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Oct
-16
Nov
-16
Dec
-16
Jan-
17
Mid-Cap Power Services & Equipment +36.3%
S&P 500 +22.2%
0%50%
100%150%
200%250%
Jan-
12
Jun-
12
Nov
-12
Apr-
13
Sep-
13
Feb-
14
Jul-1
4
Dec
-14
May
-15
Oct
-15
Mar
-16
Aug-
16
Mid-Cap Power Services & Equipment +91.3%
S&P 500 +71.3%
10-year avg: 11.2x 5-year avg: 11.8x 2-year avg: 12.3x
12.1x 10.7x
9.3x 10.1x 9.6x
10.7x 11.6x 11.6x 11.3x
12.0x 13.7x
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
14.0x
16.0x
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD
13
5-Year Trading vs. S&P 5001-Year Trading vs. S&P 500
Historical EV/LTM Revenue (Annual Averages)
Source: Capital IQ
ENERGY EFFICIENCY & CLEANTECH
Market Data
Stock Performance LTM Multiple Evolution Forward Multiples
$000s Change From 52-Week Performance EV/LTM EBITDA as of EV/EBITDA
Mkt. Cap EV 1 Month 1 Year % of High % of Low 1 Yr. Ago 6 Mos. Ago Current 2017E 2018P Energy Efficiency & CleanTech
Itron, Inc. $2,351 $2,548 (5%) 100% 92% 200% 12.8x 9.4x 11.4x 12.3x 10.6x Silver Spring Networks, Inc. $679 $566 (3%) 14% 85% 136% 11.6x 11.9x 7.6x na 21.8x Ameresco, Inc. $248 $474 (13%) 5% 86% 138% 11.7x 10.1x 10.1x 9.0x 8.5x Sunworks, Inc. $53 $48 10% (13%) 65% 121% na 16.7x na 12.9x 3.6x EnerNOC, Inc. $167 $200 (7%) 57% 73% 155% na na na na na
Min (13%) (13%) 65% 121% 11.6x 9.4x 7.6x 9.0x 3.6x Median (5%) 14% 85% 138% 11.7x 11.0x 10.1x 12.3x 9.6x Max 10% 100% 92% 200% 12.8x 16.7x 11.4x 12.9x 21.8x
0%
50%
100%
150%
Jan-
16
Feb-
16
Mar
-16
Apr-
16
May
-16
Jun-
16
Jul-1
6
Aug-
16
Sep-
16
Oct
-16
Nov
-16
Dec
-16
Jan-
17
Energy Efficiency & CleanTech +25.6% S&P 500 +22.2%
0%
50%
100%
150%
200%
Jan-
12
Jun-
12
Nov
-12
Apr-
13
Sep-
13
Feb-
14
Jul-1
4
Dec
-14
May
-15
Oct
-15
Mar
-16
Aug-
16
Energy Efficiency & CleanTech -14.3% S&P 500 +71.3%
5-year avg: 1.4x 2-year avg: 1.0x
0.0x
0.5x
1.0x
1.5x
2.0x
2.5x
3.0x
2012 2013 2014 2015 2016 2017 YTD
14
5-Year Trading vs. S&P 5001-Year Trading vs. S&P 500
Historical EV/LTM EBITDA
Source: Capital IQ
LARGE-CAP INFRASTRUCTURE SERVICES
Market DataStock Performance LTM Multiple Evolution Forward Multiples
$000s Change From 52-Week Performance EV/LTM EBITDA as of EV/EBITDA
Mkt. Cap EV 1 Month 1 Year % of High % of Low 1 Yr. Ago 6 Mos. Ago Current 2017E 2018P Large-Cap Infrastructure Services
Chicago Bridge & Iron Company N.V. $3,169 $4,952 (11%) (6%) 76% 121% 5.6x 5.3x 4.8x 5.2x 5.5x Fluor Corporation $7,354 $7,132 (3%) 28% 91% 129% 6.1x 5.0x 8.4x 9.1x 7.4x Jacobs Engineering Group Inc. $6,976 $6,708 (2%) 56% 90% 165% 7.9x 7.0x 10.2x 10.1x 10.1x SNC-Lavalin Group Inc. $8,607 $7,982 (3%) 51% 96% 152% 12.3x 8.2x 13.0x 13.9x 10.5x
Min (11%) (6%) 76% 121% 5.6x 5.0x 4.8x 5.2x 5.5x Median (3%) 40% 91% 140% 7.0x 6.2x 9.3x 9.6x 8.7x Max (2%) 56% 96% 165% 12.3x 8.2x 13.0x 13.9x 10.5x
0%
50%
100%
150%
Jan-
16
Feb-
16
Mar
-16
Apr-
16
May
-16
Jun-
16
Jul-1
6
Aug-
16
Sep-
16
Oct
-16
Nov
-16
Dec
-16
Jan-
17
La rge-Cap Infrastructure Services +2 8.0%
S&P 500 +22.2%
0%
50%
100%
150%
200%
Jan-
12
Jun-
12
Nov
-12
Apr-
13
Sep-
13
Feb-
14
Jul-1
4
Dec
-14
May
-15
Oct
-15
Mar
-16
Aug-
16
La rge-Cap Infrastructure Services -3.7% S&P 500 +71.3%
10-year avg: 10.6x 5-year avg: 8.9x 2-year avg: 8.0x
19.9x 17.1x
7.9x 7.9x 10.0x
7.7x
10.8x 10.8x
6.9x 7.8x 9.3x
0.0x
5.0x
10.0x
15.0x
20.0x
25.0x
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD
15
5-Year Trading vs. S&P 5001-Year Trading vs. S&P 500
Historical EV/LTM EBITDA
Source: Capital IQ
MID-CAP INFRASTRUCTURE SERVICES
Market DataStock Performance LTM Multiple Evolution Forward Multiples
$000s Change From 52-Week Performance EV/LTM EBITDA as of EV/EBITDA
Mkt. Cap EV 1 Month 1 Year % of High % of Low 1 Yr. Ago 6 Mos. Ago Current 2017E 2018P Mid-Cap Infrastructure Services
Amec Foster Wheeler plc $1,852 $2,928 1% 37% 75% 148% 12.4x 10.4x 8.4x 8.6x 9.0x Tutor Perini Corporation $1,384 $2,007 (3%) 119% 92% 274% 9.5x 9.4x 9.0x 7.1x 6.3x Granite Construction Incorporated $2,213 $2,000 (2%) 36% 90% 156% 8.3x 6.6x 11.8x 11.9x 9.0x Primoris Services Corporation $1,166 $1,285 (5%) 14% 89% 140% 7.5x 7.7x 10.4x 9.5x 7.4x KBR, Inc. $2,344 $2,474 (5%) 15% 92% 142% 11.5x 4.9x 11.8x 14.6x 7.5x Great Lakes Dredge & Dock Corporation $277 $653 1% 49% 89% 150% 7.1x 7.6x 9.2x 8.7x 6.6x Aecon Group Inc. $915 $1,061 6% 19% 82% 121% 5.9x 7.9x 7.8x 6.9x 6.2x
Min (5%) 14% 75% 121% 5.9x 4.9x 7.8x 6.9x 6.2x Median (2%) 36% 89% 148% 8.3x 7.7x 9.2x 8.7x 7.4x Max 6% 119% 92% 274% 12.4x 10.4x 11.8x 14.6x 9.0x
0%
50%
100%
150%
Jan-
16
Feb-
16
Mar
-16
Apr-
16
May
-16
Jun-
16
Jul-1
6
Aug-
16
Sep-
16
Oct
-16
Nov
-16
Dec
-16
Jan-
17
Mid-Cap Infrastructure Services +33.2% S&P 500 +22.2%
0%
50%
100%
150%
200%
Jan-
12
Jun-
12
Nov
-12
Apr-
13
Sep-
13
Feb-
14
Jul-1
4
Dec
-14
May
-15
Oct
-15
Mar
-16
Aug-
16
Mid-Cap Infrastructure Services +14.9% S&P 500 +71.3%
10-year avg: 8.7x 5-year avg: 9.4x 2-year avg: 10.0x12.6x
7.2x
4.8x 6.3x
8.7x
7.0x
9.1x 10.5x
12.1x
8.3x 9.5x
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
14.0x
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD
16
5-Year Trading vs. S&P 5001-Year Trading vs. S&P 500
Historical EV/LTM EBITDA
Source: Capital IQ
UTILITY SERVICES
Market DataStock Performance LTM Multiple Evolution Forward Multiples
$000s Change From 52-Week Performance EV/LTM EBITDA as of EV/EBITDA
Mkt. Cap EV 1 Month 1 Year % of High % of Low 1 Yr. Ago 6 Mos. Ago Current 2017E 2018P Utility Services
Quanta Services, Inc. $5,241 $5,611 (1%) 96% 94% 207% 10.1x 11.3x 11.9x 10.1x 8.2x MasTec, Inc. $3,066 $4,073 (5%) 169% 91% 299% 9.1x 10.9x 11.6x 8.9x 7.8x MYR Group Inc. $614 $652 (4%) 92% 90% 210% 6.4x 6.7x 9.0x 8.8x 7.6x
Min (5%) 92% 90% 207% 6.4x 6.7x 9.0x 8.8x 7.6x Median (4%) 96% 91% 210% 9.1x 10.9x 11.6x 8.9x 7.8x Max (1%) 169% 94% 299% 10.1x 11.3x 11.9x 10.1x 8.2x
0%50%
100%150%
200%250%
Jan-
16
Feb-
16
Mar
-16
Apr-
16
May
-16
Jun-
16
Jul-1
6
Aug-
16
Sep-
16
Oct
-16
Nov
-16
Dec
-16
Jan-
17
Utility Services +117.7% S&P 500 +22.2%
0%50%
100%150%
200%250%
Jan-
12
Jun-
12
Nov
-12
Apr-
13
Sep-
13
Feb-
14
Jul-1
4
Dec
-14
May
-15
Oct
-15
Mar
-16
Aug-
16
Utility Services +92.5% S&P 500 +71.3%
10-year avg: 9.4x 5-year avg: 8.3x 2-year avg: 8.7x15.6x
11.5x
9.0x 8.4x 9.1x 8.1x 7.6x 7.6x
6.8x 8.8x
10.7x
0.0x2.0x4.0x6.0x8.0x
10.0x12.0x14.0x16.0x18.0x
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD
17
5-Year Trading vs. S&P 5001-Year Trading vs. S&P 500
Historical EV/LTM EBITDA
Source: Capital IQ
INDUSTRIAL SERVICES
Market DataStock Performance LTM Multiple Evolution Forward Multiples
$000s Change From 52-Week Performance EV/LTM EBITDA as of EV/EBITDA
Mkt. Cap EV 1 Month 1 Year % of High % of Low 1 Yr. Ago 6 Mos. Ago Current 2017E 2018P Industrial Services
EMCOR Group, Inc. $4,146 $4,165 (6%) 60% 93% 163% 8.0x 7.5x 10.4x 10.4x 9.7x Bilfinger SE $1,715 $1,185 4% 3% 88% 155% na na na 11.5x 8.3x Team, Inc. $976 $1,327 (10%) 43% 86% 157% 10.2x 10.0x 20.0x 13.4x 8.7x Aegion Corporation $717 $984 (13%) 29% 84% 134% 7.0x 6.6x 9.0x 9.4x 6.8x Mistras Group, Inc. $691 $775 (11%) 12% 88% 118% 10.4x 6.2x 10.7x 9.2x 9.6x Matrix Service Company $585 $567 (2%) 23% 94% 156% 10.5x 7.0x 9.1x 9.1x 7.5x
Min (13%) 3% 84% 118% 7.0x 6.2x 9.0x 9.1x 6.8x Median (8%) 26% 88% 156% 10.2x 7.0x 10.4x 9.9x 8.5x Max 4% 60% 94% 163% 10.5x 10.0x 20.0x 13.4x 9.7x
0%
50%
100%
150%
Jan-
16
Feb-
16
Mar
-16
Apr-
16
May
-16
Jun-
16
Jul-1
6
Aug-
16
Sep-
16
Oct
-16
Nov
-16
Dec
-16
Jan-
17
Industrial Services +30.9% S&P 500 +22.2%
0%
50%
100%
150%
200%
Jan-
12
Jun-
12
Nov
-12
Apr-
13
Sep-
13
Feb-
14
Jul-1
4
Dec
-14
May
-15
Oct
-15
Mar
-16
Aug-
16
Industrial Services +40.0% S&P 500 +71.3%
10-year avg: 9.1x 5-year avg: 9.3x 2-year avg: 9.5x
11.5x
9.5x
7.8x 7.3x 7.9x 8.0x
9.3x 10.0x 9.4x 9.1x
10.1x
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
14.0x
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD
18
Recent Successes
WE ACTED AS SOLE ADVISOR TO THE SELLER
HAS BEEN ACQUIRED BY
A PORTFOLIO COMPANY OF
WE ACTED AS SOLE ADVISOR TO THE SELLER
A PORTFOLIO COMPANY OF
TO BE COMBINED WITH
HAS BEEN ACQUIRED BY
WE ACTED AS SOLE ADVISOR TO THE COMPANY
HAS SECURED SENIOR TERM FINANCING
$6,300,000
Oilfield ServicesFuel Distribution
Transaction Type:Sale of SubsidiaryBuyer DescriptionPE-backed strategic
Oilfield ServicesWaste & Container Solutions
Transaction Type:Private saleBuyer DescriptionPE-backed strategic
Industrial/OFSIndustrial tools and lighting
Transaction Type:PE SaleBuyer DescriptionPrivate Equity
Oil & GasOffshore E&P
Transaction Type:Capital RaiseBuyer DescriptionInstitutional Investor
WE ACTED AS SOLE ADVISOR TO THE SELLER
HAS BEEN ACQUIRED BY
Energy Equipment & Services Update
Energy Equipment & Services Transactions Currently in Market
Testing/ diagnostic service provider serving the oil & gas, power, and petrochemsectors.
Closing expected 3Q16.
Equipment Rental and Technical/Diagnostic
Services
Oilfield Services
ProjectBlue
SOLE ADVISOR TO THE SELLER
Capabilities and Experience
M&A Capital Formation Project Finance
– Sell-side advisory– Buy-side advisory– Strategic alternatives
– Debt / Equity / Mezz– Recapitalization– Restructuring
– Infrastructure development– Construction/term finance
The professionals in Headwaters Energy & Services practice have collectively closed more than $10 billion intransactions across the upstream, midstream, downstream, services, and P&U sectors. This experience helps our teamunderstand market dynamics and consistently achieve outlier results for our clients.
Landman Services and Proprietary Land
Management Software
Oilfield Services
ProjectPurple
SOLE ADVISOR TO THE SELLER
Residential Solar Installation
Power Services
ProjectOrange
SOLE ADVISOR TO THE SELLER
Landman services and land management software for use in O&G exploration.
Closing expected 4Q16.
Residential and commercial solar panel distribution and installation services.
Closing expected 4Q16.
Energy Equipment & Services Update
Energy Equipment & Services Transactions Currently in Market
Testing/ diagnostic service provider serving the oil & gas, power, and petrochemsectors.
Closing expected 3Q16.
Equipment Rental and Technical/Diagnostic
Services
Oilfield Services
ProjectBlue
SOLE ADVISOR TO THE SELLER
Capabilities and Experience
M&A Capital Formation Project Finance
– Sell-side advisory– Buy-side advisory– Strategic alternatives
– Debt / Equity / Mezz– Recapitalization– Restructuring
– Infrastructure development– Construction/term finance
The professionals in Headwaters Energy & Services practice have collectively closed more than $10 billion intransactions across the upstream, midstream, downstream, services, and P&U sectors. This experience helps our teamunderstand market dynamics and consistently achieve outlier results for our clients.
Landman Services and Proprietary Land
Management Software
Oilfield Services
ProjectPurple
SOLE ADVISOR TO THE SELLER
Residential Solar Installation
Power Services
ProjectOrange
SOLE ADVISOR TO THE SELLER
Landman services and land management software for use in O&G exploration.
Closing expected 4Q16.
Residential and commercial solar panel distribution and installation services.
Closing expected 4Q16.
Recent Successes
WE ACTED AS SOLE ADVISOR TO THE SELLER
HAS BEEN ACQUIRED BY
A PORTFOLIO COMPANY OF
WE ACTED AS SOLE ADVISOR TO THE SELLER
A PORTFOLIO COMPANY OF
TO BE COMBINED WITH
HAS BEEN ACQUIRED BY
WE ACTED AS SOLE ADVISOR TO THE COMPANY
HAS SECURED SENIOR TERM FINANCING
$6,300,000
Oilfield ServicesFuel Distribution
Transaction Type:Sale of SubsidiaryBuyer DescriptionPE-backed strategic
Oilfield ServicesWaste & Container Solutions
Transaction Type:Private saleBuyer DescriptionPE-backed strategic
Industrial/OFSIndustrial tools and lighting
Transaction Type:PE SaleBuyer DescriptionPrivate Equity
Oil & GasOffshore E&P
Transaction Type:Capital RaiseBuyer DescriptionInstitutional Investor
WE ACTED AS SOLE ADVISOR TO THE SELLER
HAS BEEN ACQUIRED BY
ENERGY EQUIPMENT & SERVICES UPDATE
Testing/ diagnostic service provider serving the oil & gas, power, and petrochem sectors.
Closing expected 4Q16.
Residential and com-mercial solar panel engineering and instal-lation services.
Closing expected 1Q17.
Retail fuel distribution equipment distributor and installer.
Closing expected 2Q17.
SOLE ADVISOR TO THE SELLER
I n f r a s t r u c t u r e S e r v i c e s
E q u i p m e n t R e n t a l a n dTe c h n i c a l / D i a g n o s t i c
S e r v i c e s
P r o j e c t B l u e
SOLE ADVISOR TO THE SELLER
R E N E WA B L E S S E R V I C E S
R e s i d e n t i a l a n d c o m m e r c i a l s o l a r p a n e l e n g i n e e r i n g a n d
i n s t a l l a t i o n s e r v i c e s
P r o j e c t S i e r r a
SOLE ADVISOR TO THE SELLER
I N F R A S T R U C T U R E S E R V I C E S
R e t a i l f u e l d i s t r i b u t i o n e q u i p m e n t d i s t r i b u t o r
a n d i n s t a l l e r
P r o j e c t C a s c a d e
WE ACTED AS SOLE ADVISOR TO THE SELLER
H A S B E E N A C Q U I R E D B Y
WE ACTED AS SOLE ADVISOR TO THE SELLER
A P O R T F O L I O C O M PA N Y O F
H A S B E E N A C Q U I R E D B Y
T O B E C O M B I N E D W I T H
WE ACTED AS SOLE ADVISOR TO THE SELLER
H A S B E E N A C Q U I R E D B Y
A P O R T F O L I O C O M PA N Y O F
SEN IOR TERM NOTE
WE ACTED AS SOLE ADVISOR
19
Disclosure: This newsletter is a periodic compilation of certain economic and corporate information, as well as completed and announced merger and acquisition activity. Information contained in this newsletter should not be construed as a recommendation to sell or buy any security. Any reference to or omission of any reference to any company in this newsletter should not be construed as a recommendation to buy, sell or take any other action with respect to any security of any such company. We are not soliciting any action with respect to any security or company based on this newsletter. The newsletter is published solely for the general information of clients and friends of Headwaters MB, LLC. It does not take into account the particular investment objectives, financial situation or needs of individual recipients. Certain transactions, including those involving early-stage companies, give rise to substantial risk and are not suitable for all investors. This newsletter is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. Prediction of future events is inherently subject to both known and unknown risks and other factors that may cause actual results to vary materially. We are under no obligation to update the information contained in this news-letter. Opinions expressed are our present opinions only and are subject to change without notice. Additional information is available upon request. The companies mentioned in this newsletter may be clients of Headwaters MB, LLC. The decisionsto include any company in this newsletter is unrelat-ed in all respects to any service that Headwaters MB, LLC may provide to such company. This newsletter may not be copied or reproduced in any form, or redistributed without the prior written consent of Headwaters MB, LLC. The information contained herein should not be construed as legal advice.
About Headwaters MB:Headwaters MB is an independent, middle-market investment banking firm providing strategic merger and acquisition, corporate finance, and merchant banking services through proprietary sources of capital. Named “Investment Bank of the Year” by the M&A Advisor in 2014 - 2016, Headwaters MB is headquartered in Denver, CO, with seven regional offices across the United States and partnerships with 18 firms covering 30 countries. For more information, visit www.headwatersmb.com
To learn more about how the Headwaters MB team can help you grow from opportunities in the Energy Equipment & Services sector, please contact:
Te d K i n s m a n | M a n a g i n g D i re c t o rE n e rg y E q u i p m e n t & S e r v i c e s3 0 3 .5 7 2 .6 01 3 t k i n s m a n @ h e a d w a t e r s m b. c o m
Ti m M c E u e n | S e n i o r V i c e P re s i d e n tE n e rg y E q u i p m e n t & S e r v i c e s3 0 3 .9 6 2 .5 7 7 8 t m c e u e n @ h e a d w a t e r s m b. c o m
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