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BUSINESS VALUATION & FINANCIAL ADVISORY SERVICES
Construction Overview Construction & National GDP 1Construction & National Unemployment 2Value of Construction Put-in-Place 3
Sector Focus: Nonresidential Construction 4
Trade-Weighted Index 5Yield on 10-Year Treasury 6Manufacturing Capacity Utilization 7Private Investments in Manufacturing Structures 8Office Rental Vacancy 9Corporate Profit 10
Sector Round-up Residential Construction 11Building Materials 13Roads, Bridges and Highways 14
Mergers and Acquisitions 15
Bellwether Stocks & Industry Participants 16
About Mercer Capital 19
www.mercercapital.com
VALUE FOCUS
Fourth Quarter 2015
Construction & Building Materials
SEGMENT FOCUS Nonresidential Construction
EXECUTIVE INDUSTRY TRENDS
• The FAST Act will provide $305 billion in transportation
infrastructure funding for a guaranteed period of 5 years
• The Fed’s rate hike in Q4 reversed a trend of declining treasury
yields, potentially signaling an increase in financing costs
• Stagnating and declining put-in-place measures
• Vacancy rates demonstrate potential demand as corporate profit
slides and financing costs increases
© 2015 Mercer Capital // www.mercercapital.com 1
Mercer Capital’s Value Focus: Construction & Building Materials Fourth Quarter 2015
GDP rose 3.1% over the past twelve months, falling within an ideal range of 2% to 4% annually. Over the past ten
years, construction has averaged 4.1% of national GDP, and it accounted for 4.1% of GDP this past quarter. These are
signs the economy, including the construction industry, are healthy and returning to normal levels. Construction lagged
behind the rest of the economy, particularly in the years following the decline of 2009, but since then it has steadily
recovered, marked by a 10.5% year-over-year increase in Construction GDP. Activity is expected to continue to improve
going forward.
$0 $100 $200 $300 $400 $500 $600 $700 $800
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
2007
Q1 Q2 Q3 Q4
2008
Q1 Q2 Q3 Q4
2009
Q1 Q2 Q3 Q4
2010
Q1 Q2 Q3 Q4
2011
Q1 Q2 Q3 Q4
2012
Q1 Q2 Q3 Q4
2013
Q1 Q2 Q3 Q4
2014
Q1 Q2 Q3 Q4
2015
Q1 Q2 Q3 Q4
GD
P ($Billions)
Ann
ualiz
ed R
eal G
row
th R
ate
Quarterly Growth Average Quarterly Growth GDP (Current Dollars) Source: Bureau of Economic Analysis
-6%
-4%
-2%
0%
2%
4%
6%
National Construction
Construction OverviewConstruction & National GDP
Construction Gross Domestic Product
% Change in GDP
Source: Tradingeconomics.com | U.S. Bureau of Economic Analysis
Construction
Period % Change
Q-o-Q 2.6%
Y-o-Y 10.5%
National
Period % Change
Q-o-Q 0.6%
Y-o-Y 3.1%
© 2015 Mercer Capital // www.mercercapital.com 2
Mercer Capital’s Value Focus: Construction & Building Materials Fourth Quarter 2015
According to the Federal Reserve, a healthy economy typically has an unemployment rate between 4.5% and 6.0%. The
current level of 5.0% represents strength in the economy, after decreasing steadily from 5.6% a year ago.
Construction is a cyclical and seasonal industry, so its unemployment rate is more volatile. The major contributing
factor to the seasonal nature of the construction industry is the weather. Production of materials and projects in general
decrease during the cold, winter months. The construction unemployment is currently 7.5%, down from 8.3% a year ago.
This represents an overall strengthening of the industry. Entering the colder months of the next quarter, this number will
most likely rise, but not drastically. Lower unemployment rates suggest an increase of activity within the industry.
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
National Construction
Note: The national unemployment rate is seasonally adjusted, but the construction unemployment rate is not in order to show seasonality and recent trends. Source: U.S. Bureau of Labor Statistics
Construction OverviewConstruction & National Unemployment
Unemployment Rate
© 2015 Mercer Capital // www.mercercapital.com 3
Mercer Capital’s Value Focus: Construction & Building Materials Fourth Quarter 2015
The value of construction put-in-place is the total cost of construction on a job site for a particular period. The U.S.
Census Bureau tracks this data and reports the total monthly. These costs include, but are not limited to, the building
materials, labor, profit, engineering, interest, and taxes.
Year-over-year put-in-place construction has increased by 13.3% for residential and by 5.9% for nonresidential. Despite
strong yearly growth, both are stagnating or even declining this quarter with residential construction experiencing no
growth and nonresidential construction decreasing by 2.7%. The lower figures are likely due to stabilization after two
quarters of rapid growth. Higher levels of put-in-place construction suggest increasing activity within the industry.
Construction OverviewValue of Construction Put-in-Place
$0
$100
$200
$300
$400
$500
$600
$700
$800$Billions
Residential Nonresidential
Source: U.S. Census Bureau
Value of Construction Put-in-Place
Residential
Period % Change
Q-o-Q 0.0%
Y-o-Y 13.3%
Nonresidential
Period % Change
Q-o-Q -2.7%
Y-o-Y 5.9%
© 2015 Mercer Capital // www.mercercapital.com 4
Mercer Capital’s Value Focus: Construction & Building Materials Fourth Quarter 2015
Nonresidential construction is largely trending upwards, bolstered by increases in the infrastructure and commercial
building sectors. Office vacancy rates are low, which typically indicates a need for private investment in office space. The
public investment outlook is strong now due to a recent federal government budget approval and the FAST Act. In early
December, President Obama signed the long-awaited highway funding bill into law, providing $305 billion to fixing roads
and bridge construction across the country for a guaranteed period of five years. While the dollar amount is important,
the certainty of funding provided could potentially have a greater impact. Local and state governments can now continue
to fund their backlogged projects that were held up due to lack of long-term funding.
Oil prices have significantly declined with no foreseeable recovery in sight. To combat this, oil and gas companies have
been forced to reduce capital expenditures. While many companies’ balance sheets are stressed, they are still producing
large quantities of oil. Most of their costs are incurred on the front end, so they continue to produce, accepting reduced
prices. In response, nonresidential construction companies operating within the energy sector have pivoted away from
delivering new large structures, opting instead to focus on maintaining current ones. If oil prices remain suppressed,
companies will continue to decrease their rig count, yet continue running some rigs, which will continue to require
maintenance and repairs from construction companies. In addition to this switch, construction companies are relying on
their own diversity as well as shifting focus towards refineries to weather the plunge in oil prices. Prices were as low as
$34.73 per barrel for the quarter, only 18 months after being at $107.26 in June of 2014.
The strong dollar has negatively affected nonresidential construction companies operating globally. When the dollar is
strong, imports become cheaper and exports become more expensive, which decreases foreign demand for American
companies doing business both at home and abroad. Fluor and Jacobs, the two biggest players in the industry, have lost
significant revenue due to foreign exchange rates. Fluor’s backlog lost $3 billion in value due to the strong dollar in the
past year, and Jacob’s sales decreased in value by $100 million in the last quarter alone. This led companies to report
their financials on a constant currency basis to give a more accurate depiction of the company’s underlying performance
before the impact of foreign currency.
The nonresidential construction sector has continued to focus on winning bids to increase backlogs, which are a
significant indicator of future revenue. An influx of projects coming down the pipeline has bolstered backlogs and book
to burn rates. Companies feel less pressure to squeeze margins in order to win bids in this environment. Project mix is
also a considerable concern, and companies are trending towards higher margins in their backlogs, even factoring in
building construction which is on the rise and tends to have smaller margins due to contractual logistics involved with
using subcontractors.
Sector FocusNonresidential Construction
© 2015 Mercer Capital // www.mercercapital.com 5
Mercer Capital’s Value Focus: Construction & Building Materials Fourth Quarter 2015
The Trade-Weighted Index measures the relative strength of the U.S. dollar in comparison to foreign currencies, putting
an emphasized weight on both the most common trade partners and largest economies. When the dollar is strong,
imports become cheaper and exports become more expensive. A 10.9% year-over-year increase in TWI has made the
dollar stronger than it has been in the past ten years, which has increased the cost for other countries to purchase U.S.
building materials and services, decreasing sales volume and weakening the industry.
Nonresidential ConstructionTrade-Weighted Index
Trade-Weighted Index
80
90
100
110
120
130
Source: St. Louis Fed | Board of Governors of the Federal Reserve (US)
Trade-Weighted Index
Period % Change
Q-o-Q 1.7%
Y-o-Y 10.9%
© 2015 Mercer Capital // www.mercercapital.com 6
Mercer Capital’s Value Focus: Construction & Building Materials Fourth Quarter 2015
The yield on 10-Year Treasury Bonds acts as a proxy for how expensive it is to finance construction projects. Growth
in the nonresidential construction industry could be adversely affected by the current rising interest rates. It should be
noted, however, that flight to safety during gloomy macroeconomic times can depress yields. An increase in yields raises
the cost of investment, but it can also signify increasing optimism, which leads to more spending in the construction
industry. In recent years, yields have been relatively volatile but trending downwards. The 7 basis point bump in the past
quarter was greater than the relatively small year-over-year increase. This trend could mean higher financing costs in
the future, and therefore, decreased demand for the industry.
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
Source: St. Louis Fed | Board of Governors of the Federal Reserve (US)
Nonresidential ConstructionYield on 10-Year Treasury
Yield on 10-Year Treasury
Yield on 10-Year Treasury
Period % Change
Q-o-Q 7 BPS
Y-o-Y 3 BPS
© 2015 Mercer Capital // www.mercercapital.com 7
Mercer Capital’s Value Focus: Construction & Building Materials Fourth Quarter 2015
Manufacturing capacity utilization (MCU) has increased steadily since the sharp decline of 2009. It is the ratio of how
much manufacturing activity is present relative to the capacity level of output. Increasing MCU is usually accompanied
by higher long-term interest rates; high interest rates make firms less likely to invest in more capital as it becomes
more expensive. Instead of expanding operations, companies then are more likely to increase output levels at existing
facilities, driving up utilization. MCU is expected to continue to grow modestly through 2021.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Source: IBIS World | Federal Reserve
Nonresidential ConstructionManufacturing Capacity Utilization
Manufacturing Capacity Utilization
Manufacturing
Capacity Utilization
Period % Change
Y-o-Y -1.1%
© 2015 Mercer Capital // www.mercercapital.com 8
Mercer Capital’s Value Focus: Construction & Building Materials Fourth Quarter 2015
Private investment in manufacturing structures is a measure of how much money businesses are spending on new
and existing structures. Optimism in the overall economy has helped investment levels rebound after recession years.
Businesses are more willing to invest in capital expenditures, but problems still exist. Outsourcing will continue to be an
industry road block considering the current strength of the dollar. Additionally, interest rates are expected to increase,
which raises the cost of financing large projects.
$0
$20
$40
$60
$80
$100
$120$Billions
Source: IBIS World | U.S. Bureau of Economic Analysis
Nonresidential ConstructionPrivate Investments in Manufacturing Structures
Private Investments in Manufacturing Structures
Private Investment in
Manufacturing Structures
Period % Change
Y-o-Y 48.3%
© 2015 Mercer Capital // www.mercercapital.com 9
Mercer Capital’s Value Focus: Construction & Building Materials Fourth Quarter 2015
Office rental vacancy can be a signal for new commercial construction demand. Low vacancy rates indicate a need
for more space for companies to conduct business, which is a boon for the nonresidential construction industry. The
downward trend indicates a potential future demand for inventory.
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
Source: IBIS World | Cushman and Wakefield
Nonresidential ConstructionOffice Rental Vacancy
Office Rental Vacancy
Office Rental Vacancy
Period % Change
Y-o-Y -64 BPS
© 2015 Mercer Capital // www.mercercapital.com 10
Mercer Capital’s Value Focus: Construction & Building Materials Fourth Quarter 2015
Corporate profit is essential for companies not only to survive, but to grow and expand. When corporate profit increases,
companies are more willing and able to open new branches and divisions. These additions lead to an increase in
commercial construction.
The prior chart (office rental vacancy) coupled with the chart below seems to give opposite results. A 4% decrease in
office rental vacancy means investment is likely needed to increase the amount of overall office space. A main indicator
of the availability of funds for this investment, however, is corporate profit which has declined. So, while there is a need
for more investment, there is relatively less internal funding available to fund such growth.
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000$Billions
Source:St. Louis Federal Reserve
Nonresidential ConstructionCorporate Profit
Corporate Profit
Corporate Profit
Period % Change
Q-o-Q -8.1%
Y-o-Y -3.6%
© 2015 Mercer Capital // www.mercercapital.com 11
Mercer Capital’s Value Focus: Construction & Building Materials Fourth Quarter 2015
The National Association of Home Builders uses surveys to produce two indices on the confidence level within the
homebuilding industry. For both surveys, respondents are asked to rate market conditions, with 50 being the index
average. Both indices show clear declines due to the housing crisis, but they have steadily increased, and both have
been above 50 since the middle of 2014. After reaching a 10-year high in October, HMI slumped slightly for the remainder
of the quarter. Moving in the exact opposite direction, RMI has gone up slightly this quarter but is down for the year.
While there will likely be fluctuations in both going forward, it is a good sign as long as these indices are above average.
0
10
20
30
40
50
60
70
80
90
100
HMI RMINote: RMI is measured quarterly and approximated for a monthly basis using a straight-line approach. Source: National Association of Home Builders
Sector Round-upResidential Construction
NAHB Housing Market and Remodeling Market Indices
NAHB HMI
Period % Change
Q-o-Q -1.6%
Y-o-Y 3.4%
NAHB RMI
Period % Change
Q-o-Q 1.2%
Y-o-Y -3.3%
© 2015 Mercer Capital // www.mercercapital.com 12
Mercer Capital’s Value Focus: Construction & Building Materials Fourth Quarter 2015
Building permits and housing starts are two important indicators for the home building industry. Both reflect demand,
consumer confidence, and the feasibility of financing such construction projects. Building permits can be issued and then
shelved by builders; therefore, housing starts are a better focused measure of current activity within the industry. Housing
permits and housing starts have felt the effect of the housing bubble with a steep drop of nearly 75% in three years from
06Q1 to 09Q1. Both of these have recovered somewhat as the economy has gotten back on track, but they are unlikely to
reach prerecession highs, which were artificially high due to the housing bubble. As seen below, all levels of permits and
starts have increased over the past year.
Sector Round-upResidential Construction(continued)
Seasonally Adjusted Annualized Rates of New Housing Starts and Building Permits
Millions of Units
Private Housing Starts
Period % Change
Q-o-Q -4.8%
Y-o-Y 6.4%
Single Family Starts
Period % Change
Q-o-Q 3.6%
Y-o-Y 6.1%
Private Building Permits
Period % Change
Q-o-Q 9.0%
Y-o-Y 11.8%
Single Family Building Permits
Period % Change
Q-o-Q 5.5%
Y-o-Y 6.9%
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
2.2
2.4
Dec-00
Dec-01
Dec-02
Dec-03
Dec-04
Dec-05
Dec-06
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15
Private Housing Starts Single Family Starts Private Building Permits Single Family Building Permits
Source: U.S. Census Bureau Note: Permits at a given date are generally a leading indicator of future starts. Beginning with January 2004, building permit data reflects the change to the 20,000 place series.
Private Housing
Single Family
Housing
© 2015 Mercer Capital // www.mercercapital.com 13
Mercer Capital’s Value Focus: Construction & Building Materials Fourth Quarter 2015
Construction aggregates, asphalt, cement, and ready-mix concrete are all essential elements to building and maintaining
roads and highways. Companies that deal in building materials sell a sizeable amount of their products to publicly
funded projects. Therefore, government funding is an important driver for the industry, and companies benefit when
public spending increases. According to the chart below, GCI has stagnated this quarter with no growth, but it has still
increased 1.1% over the past year. If it continues to stagnate as in this previous quarter, the industry will experience
decreased levels of demand. This is not expected to happen because of the favorable impact of the FAST Act should
have on road construction.
$2,650
$2,700
$2,750
$2,800
$2,850
$2,900
$2,950
$3,000
$3,050
$3,100
$3,150
$Billions
Source: St. Louis Fed | U.S. Bureau of Economic Analysis
Sector Round-upBuilding Materials
Government Consumption and Investment
Government Consumption
and Investment
Period % Change
Q-o-Q 0.0%
Y-o-Y 1.1%
© 2015 Mercer Capital // www.mercercapital.com 14
Mercer Capital’s Value Focus: Construction & Building Materials Fourth Quarter 2015
The yield on 10-Year Treasury Bonds, as shown in an earlier graph, can indirectly affect the road contracting industry.
Higher interest rates make construction projects more expensive to undertake. When yields on the 10-Year Treasury are
low and stable, the construction industry experiences increased investment and project volume. When interest rates are
high, it is more expensive for the public sector to finance industry projects such as road building. The 10-Year yield has
increased more in the past quarter than the past year. If this trend continues, borrowing costs will increase for projects,
and the government will not be able to fund as many roads with the money provided by the FAST Act.
Without funding, construction projects cannot be completed. Much of this funding comes from public resources, so the
industry must always be concerned with the level of government spending on construction activity. Government funding
for highways is expected to increase significantly, as demonstrated in the below graph, despite a small decrease from
the previous year. This is in large part due to the expected long-term congressional funding bill for highway repairs and
construction.
$0
$50
$100
$150
$200
$250
$300
$Billions
Source: IBIS World | Bureau of Economic Analysis
Sector Round-upRoads, Bridges and Highways
Government Funding for Highways
Government Funding for
Highways
Period % Change
Y-o-Y -2.1%
© 2015 Mercer Capital // www.mercercapital.com 15
Mercer Capital’s Value Focus: Construction & Building Materials Fourth Quarter 2015
Announce Date
Industry Subsector Target/Issuer Buyers/Investors Seller Description
December 16 Home Building JW Homes, LLC PulteGroup Inc. Wheelock StreetBuilds new homes, townhomes, and neighborhoods for home buyers in big cities in GA, SC, TN, and NC.
December 7 NonresidentialJ.L. Patterson & Associates, Inc.
Jacobs Engineering Group Inc.
Provides engineering design, construction manage-ment, and staff augmentation services among many others in the public and private sector across the U.S.
November 5 NonresidentialKBR, Inc., Infrastructure Americas Division
Stantec Inc. KBR, Inc.Divestiture of division that provides construction and engineering services in the U.S.
October 28 Home BuildingHans Hagen Homes, Inc.
M/I Homes, Inc.Operates as a home builder in Minnesota and Western Wisconsin offering home communities to families.
October 28 Building MaterialsHeavy Materials, LLC and Spartan Concrete Products, LLC
U.S. Concrete, Inc.Both manufacture ready-mixed concrete and aggregates in the U.S.
Source: Capital IQ
Mergers and Acquisitions
© 2015 Mercer Capital // www.mercercapital.com 16
Mercer Capital’s Value Focus: Construction & Building Materials Fourth Quarter 2015
Ticker Exchange
Stock Price at 12/31/15
LTM Price Range
Enterprise Value
LTMLTM
Margin EBITDA/
Rev.
LTM MultipleForward Multiples
High Low Rev. EBITDA EV/Rev. EV/EBITDAEV/
EBITDA
Residential
Beazer Homes USA Inc. BZH NYSE $11.49 $21.19 $11.18 $1,726.47 $1,706.10 $53.28 3% 1.0x 33.1x 11.3x
Comstock Holding Companies, Inc. CHCI Nasdaq 1.46 7.84 1.41 45.64 61.38 (0.09) 0% 1.2x NM 0.0x
DR Horton Inc. DHI NYSE 32.03 33.10 22.12 14,327.06 10,937.80 1,249.20 11% 1.3x 11.6x 11.6x
Hovnanian Enterprises Inc. HOV NYSE 1.81 4.27 1.37 2,358.98 2,148.48 80.21 4% 1.1x 28.0x 14.8x
KB Home KBH NYSE 12.33 17.42 11.76 3,201.74 3,032.03 163.25 5% 1.2x 22.8x 21.2x
Lennar Corporation LEN NYSE 48.91 56.04 41.25 16,193.29 9,474.01 1,162.72 12% 1.7x 13.2x 10.4x
LGI Homes, Inc. LGIH Nasdaq 24.33 36.07 12.21 757.44 630.24 82.69 13% 1.2x 9.7x 8.9x
MDC Holdings Inc. MDC NYSE 25.53 31.23 23.87 1,955.47 1,909.04 113.21 6% 1.1x 18.4x 13.5x
NVR, Inc. NVR NYSE 1,643.00 1,721.95 1,187.84 6,630.80 5,168.45 647.66 13% 1.3x 11.2x 10.9x
PulteGroup, Inc. PHM NYSE 17.82 23.36 17.08 7,910.76 5,981.96 835.90 14% 1.3x 10.2x 8.5x
Toll Brothers Inc. TOL NYSE 33.30 42.19 32.19 8,671.69 4,171.25 505.80 12% 2.1x 16.5x 16.6x
Median $24.33 $31.23 $17.08 $3,201.74 $3,032.03 $163.25 11% 1.2x 14.8x 11.3x
Average $168.36 $181.33 $123.84 $5,798.12 $4,110.98 $444.89 8% 1.3x 17.5x 11.6x
All figures reported in millions, except per share data
Source: Capital IQ
Bellwether Stocks & Industry Participants
© 2015 Mercer Capital // www.mercercapital.com 17
Mercer Capital’s Value Focus: Construction & Building Materials Fourth Quarter 2015
Ticker Exchange
Stock Price at 12/31/15
LTM Price Range
Enterprise Value
LTMLTM
Margin EBITDA/
Rev.
LTM MultipleForward Multiples
High Low Rev. EBITDA EV/Rev. EV/EBITDAEV/
EBITDA
Building Materials
Eagle Materials Inc. EXP NYSE $60.43 $88.81 $58.13 $3,509.28 $1,115.14 $311.74 28% 3.1x 9.9x 9.7x
Martin Marietta Materials, Inc. MLM NYSE 136.58 178.67 104.15 10,451.15 3,268.12 767.43 23% 3.2x 13.5x 12.8x
MDU Resources Group Inc. MDU NYSE 18.32 24.51 16.15 5,548.46 4,191.55 498.96 12% 1.3x 6.8x 10.8x
Summit Materials, Inc. SUM NYSE 20.04 28.57 17.53 2,329.02 1,364.92 216.60 16% 1.7x 10.1x 8.4x
US Concrete, Inc. USCR Nasdaq 52.66 62.82 25.02 1,049.54 974.72 117.90 12% 1.2x 10.2x 8.3x
Vulcan Materials Company VMC NYSE 94.97 106.84 64.28 14,357.71 3,422.18 826.25 24% 4.4x 19.4x 17.9x
Cemex SAB de CV (ADR) CX NYSE N/A N/A N/A N/A N/A N/A 19% 1.7x 9.4x 0.0x
CRH PLC (ADR) CRH NYSE N/A N/A N/A N/A N/A N/A 9% 1.2x 13.4x 0.0x
HeidelbergCement HEI GR N/A N/A N/A N/A N/A N/A 17% 1.6x 8.5x 8.4x
LafargeHolcim Group LHN VTX N/A N/A N/A N/A N/A N/A 5% 2.5x 13.6x 9.5x
Median $56.55 $75.82 $41.58 $4,528.87 $2,316.52 $405.35 17% 1.7x 10.1x 9.0x
Average $63.83 $81.70 $47.54 $6,207.53 $2,389.44 $456.48 17% 2.2x 11.5x 8.6x
Roads, Bridges, and Highways
Granite Construction Inc. GVA NYSE $42.91 $44.40 $28.45 $1,477.73 $2,371.03 $160.33 7% 0.7x 10.4x 9.9x
Sterling Construction Co STRL Nasdaq 6.08 6.66 2.23 135.88 623.60 4.46 1% 0.2x NM 19.8x
Tutor Perini Corporation TPC NYSE 16.74 26.71 14.95 1,569.47 4,920.47 147.03 3% 0.3x 7.8x 7.2x
Median $16.74 $26.71 $14.95 $1,477.73 $2,371.03 $147.03 3% 0.3x 9.1x 9.9x
Average $21.91 $25.92 $15.21 $1,061.03 $2,638.37 $103.94 3% 0.4x 9.1x 12.3x
All figures reported in millions, except per share data
Source: Capital IQ
Bellwether Stocks & Industry Participants
Note: CX, CRH, HEI, and LHN report in foreign currency. Margin and multiples unaffected and shown for analysis.
© 2015 Mercer Capital // www.mercercapital.com 18
Mercer Capital’s Value Focus: Construction & Building Materials Fourth Quarter 2015
Ticker Exchange
Stock Price at 12/31/15
LTM Price Range
Enterprise Value
LTMLTM
Margin EBITDA/
Rev.
LTM MultipleForward Multiples
High Low Rev. EBITDA EV/Rev. EV/EBITDAEV/
EBITDA
Nonresidential
Aecom Technology Corporation ACM NYSE $30.03 $35.40 $24.04 $8,615.91 $18,077.06 $987.27 5% 0.5x 7.7x 8.7x
Chicago Bridge and Iron Company N.V. CBI NYSE 38.99 59.45 32.16 6,625.90 12,929.50 1,228.80 10% 0.5x 5.0x 5.2x
Dycom Industries Inc. DY NYSE 69.96 90.82 30.66 2,892.21 2,171.19 288.96 13% 1.3x 10.0x 8.9x
EMCOR Group Inc. EME NYSE 48.04 52.37 39.83 2,848.69 6,718.73 362.10 5% 0.4x 8.2x 8.1x
Fluor Corporation FLR NYSE 47.22 62.26 40.61 5,648.76 18,114.05 1,116.11 6% 0.3x 4.7x 5.0x
Jacobs Engineering Group Inc. JEC NYSE 41.95 48.25 36.05 5,364.46 12,114.83 750.48 6% 0.4x 7.1x 7.5x
MasTech, Inc. MTZ NYSE 17.38 22.79 14.48 2,410.41 4,208.33 250.12 6% 0.6x 8.9x 8.6x
Quanta Services, Inc. PWR NYSE 20.25 30.61 18.46 3,591.08 7,572.44 497.25 7% 0.5x 5.5x 6.9x
Median $40.47 $50.31 $31.41 $4,477.77 $9,843.63 $623.86 6% 0.5x 7.4x 7.8x
Average $39.23 $50.24 $29.54 $4,749.68 $10,238.27 $685.13 7% 0.6x 7.1x 7.4x
All figures reported in millions, except per share data
Source: Capital IQ
Bellwether Stocks & Industry Participants
Mercer CapitalConstruction & Building Materials Industry Services
Contact Us
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Reporters requesting additional information or editorial comment should contact Barbara Walters Price at 901.685.2120. Mercer Capital’s Industry Focus is published quarterly and does not constitute legal or financial consulting advice. It is offered as an
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Mercer Capital provides valuation and transaction advisory services to the construction and building materials industries.
Industry Segments
Mercer Capital serves construction industry segments from to commercial and civil to residential. We also serve the
building materials sector from aluminum and steel to brick, glass, and lumber.
Mercer Capital Experience
• Family and management succession planning
• Buy-side and sell-side transaction advisory assistance
• Conflict resolution and litigation support
• Trust and estate planning
• Buy-sell agreement valuation, design, and funding advisory
Contact a Mercer Capital professional to discuss your needs in confidence.
Timothy R. Lee, ASA
901.322.9740
Nicholas J. Heinz
901.685.2120
MERCER CAPITAL
Memphis
5100 Poplar Avenue, Suite 2600
Memphis, Tennessee 38137
901.685.2120
Dallas
12201 Merit Drive, Suite 480
Dallas, Texas 75251
214.468.8400
Nashville
102 Woodmont Blvd., Suite 231
Nashville, Tennessee 37205
615.345.0350
www.mercercapital.com
BUSINESS VALUATION & FINANCIAL ADVISORY SERVICES