Energy equipment services monthly report – september final

1

September 2016

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 moderated somewhat after reaching the upper $40 range

– Prices weakened by rising exports from Iran, elevated inventories, and weak refinery demand

• US Rig counts continue to improve moderately

– Since August 12, the US onshore market has added 25 rigs, bringing the total rig count to 506

– International rig counts rose slightly by 66 in August

• Refining utilization decreased mildly since last month, and more substantial declines are expected going forward

– 300k bbl/d capacity expected to be down for routine maintenance at times during fourth quarter, excluding economic run cuts or unplanned downtime

• In Q2 2016, overall solar system pricing fell by up to 7.5%. Utility fixed-tilt and tracking projects in Q2 2016 saw an average pricing of $1.17/Wdc and $1.30/Wdc, respectively.

• Continued elevated temperatures led to record power demand across the country, including an all-time one-day demand record in ERCOT of 70.1 GW in late August

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

% of High % of Low 6 Mos. Ago Current 2016E 2017P

Oilfield Services & EqupmentLarge-Cap 85% 128% 12.4x 15.6x 19.8x 14.0xMid-and Small-Cap 71% 172% 7.6x 8.7x 10.0x 12.0xOil & Gas Equipment 77% 130% 7.8x 13.1x 10.9x 19.1xLand Drillers 78% 173% 4.8x 11.8x 13.1x 13.3x

Power Services & EqupmentLarge-Cap 95% 133% 9.1x 10.4x 10.0x 9.6xMid- and Small-Cap 90% 133% 10.6x 11.7x 11.7x 10.8xClean Tech and Solar 66% 140% 10.6x 10.6x 9.1x 9.0x

Infrastructure & Industrial ServicesLarge-Cap Infrastructure 88% 133% 5.9x 7.6x 7.7x 7.3xMid- and Small-Cap Infrastructure 76% 138% 8.0x 8.2x 7.0x 6.0xUtility Services 92% 158% 10.2x 9.5x 7.2x 6.2xIndustrial Services 74% 133% 7.6x 9.2x 9.2x 8.1x

Forward MultiplesEV/EBITDA52-Week Perf.

LTM MultiplesEV/LTM EBITDA as of

Stock Performance

3

Industry UpdateRECENT TRANSACTIONS

Date Seller/Target Description AcquirerSep-16 Extreme Plastics Plus Environmental linings, above-ground storage tanks, secondary

steel wall containment systems, rig mats, and rig vacsBW 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

Aug-16 LoneStar Geophysical(via bankruptcy)

Seismic data acquisition services including permitting, surveying,and recording

Dawson Geophysical

Aug-16 NBR Sand LLC Single sand mine and plant serving the Haynesville and upper Eagle Ford basins

U.S. Silica

Aug-16 TC Backhoe Drilling, powerline, and underground infrastructure installation and repair, serving the Canadian market

Quanta Services

Aug-16 RPM Services Equipment rental services in Arkansas, Louisiana, Oklahoma, Texas, and Missouri

Hugg & Hall EqupmentCompany

Jul-16 Managed Pressure Operations LLC

Provides managed pressure drilling and continuous circulating systems for onshore and offshore drilling markets

AFGlobal Corporation

Jul-16 Rotary Drilling Tools USA LP (via OFS Energy Fund)

Manufactures and markets oilfield drilling tubular tools, including drill pipes, drill collars, and drilling accessories

Vallourec Drilling Products USA

Jun-16 AchorPipeInternational Inc.

Provides pipeline anchoring solutions worldwide, both offshore and onshore

TorcSill Foundations LLC

May-16 Tercel Oilfield Products

Designs and manufactures products for E&P drilling, completion, and production operations

Rubicon Oilfield International Holdings

Mar-16 Five Companies Combined OFS, transportation, and environmental operations of five portfolio companies of CCNG Energy Partners LP

Guggenheim Capital Funding LLC

Jan-16 Trican Well Service Ltd

Provides pressure pumping and other general well and production services

Keane Group Holdings

Jan-16 CC American Oilfield LLC

Designs, manufactures, repairs and services oil and gas pressure vessels, as well as fuel scrubbers, filter separators, production skids and other wellsite equipment

CSE Global Ltd

Dec-15 Pioneer Energy Services

Three non-walking SCR drilling rigs and one walking SCR drilling rig Undisclosed buyer

4

M&A | Energy Deal Flow Set to Rebound

“Dealmakers predict M&A in the energy industry will acceler-ate over the next 12 months, according to Mergers & Acqui-sitions’ Mid-Market Pulse (MMP)… Many dealmakers appear to be in a “holding pattern,” as one survey respondent put it. The election is expected “to remove uncertainty about the directions of tax policies and the regulatory environment.” Re-gardless of the outcome, “deal flow will pick up with clients finally moving forward on deals.”

Mergers & Acquisitions | MID-MARKET PULSE: Energy M&A Expected to Rebound

Renewables | NRG Set to Acquire 2.1 GW from SunEdison

“NRG Energy has taken action to acquire 2.1 GW of utility-scale wind and solar assets owned by bankrupt renewables giant SunEdison with a $144 million auction bid this week. New Jer-sey–based NRG Energy on Sept. 12 executed a purchase and sale agreement (PSA) to take on 200 MW of SunEdison’s con-struction-ready, fully contracted solar assets in Texas. It will also acquire interest in a structured partnership with SunEd-ison for 683 MW of “nearly complete,” fully contracted solar assets in Utah, as well as 1.25 GW of solar and wind assets in different stages of development across the U.S.”

PowerMag | NRG Poised to Scoop up 2.1 GW of Renewable Assets from Bankrupt SunEdison

Solar Energy | Solar Prices Hit All Time Low

“Solar energy prices are at an all-time low and look to fall even further, according to a pair of studies on the state of the solar market from Lawrence Berkeley National Laboratory, a U.S. Department of Energy facility managed by the University of California. The price drops for solar energy systems were un-even across sectors. For example, installed residential system costs dropped 5 percent year-over-year. On the other end of the size spectrum, large utility-scale solar systems installed in 2015 dropped by 12 percent year-over-year.”

Denver Business Journal | Solar Energy Prices Hit All-Time Low

Colorado Natural Gas | Gas Offtake

“Colorado holds 10 or our 100 largest natural gas fields, and the potential is massive. The Niobrara shale… is producing over 4.1 Bcf/day, or nearly as much as Mexico generates in to-tal… Western Colorado’s Mancos Shale formation holds and estimated 66.3 Tcf of natural gas. Colorado though requires more gas infrastructure, such as pipeline and storage, the lat-ter vital to maintaining supplies for utilities and homes on cold days while also allowing producers to store gas in the short-term and keep wells operating.”

Forbes | Colorado’s Natural Gas Needs New Markets

Market Update | Fed Policy to Impact Markets in 2017

“Earlier in the recovery, many economists (and the Fed) be-lieved that many workers that dropped out would rejoin the labor force, allowing for substantial economic growth before wage inflation set in… Labor force participation has barely im-proved since its 2015 trough. Data from the Philadelphia fed show that retirees make up a large part of the decline in the participation rate, which is perhaps why it has not rebounded as fast as many expected. Labor force supply growth has also slowed, for demographic reasons. How the Fed responds to tightening labor markets will probably be the biggest issue for US financial markets in 2017”

JP Morgan | Eye on the Market, September 6, 2016

ARTICLES WE ENJOYED

5

1 Year WTI and Henry Hub Prices

Source: Capital IQ

COMMENTARY: • WTI has fallen from $47 to the $43 range,

though it remains bounded in the $43-$50 range. Key factors in the recent decline

– Market fatigue about OPEC’s production ceiling talk

– Above-forecast output for Russia, OPEC, and the US (though US production fell 50k b/d week-over-week)

– Poor refiner demand

– Elevated existing inventories

– Strengthening dollar

• Further fueling bearish sentiment, Bloomberg estimates that Iranian exports hit 2.16m b/d in August, representing a post-sanctions high

• On the trading side, funds remain relatively bearish on both crude and gasoline

– Net length in WTI rose substantially on extensive short covering

– USO outflows reached $470mm over the past two weeks, the largest outflow of any two-week period this year

COMMODITY PRICE UPDATE

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Crude (left) Natural Gas (right)

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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

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Other Permian Williston Marcellus-Utica Eagle Ford Haynesville

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Public ComparablesLARGE-CAP OILFIELD SERVICES

5-Year Trading vs. S&P 5001-Year Trading vs. S&P 500

Historical EV/LTM EBITDA

Source: Capital IQ

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 2016E 2017P Large-Cap Oilfield Services

Schlumberger Limited $106,591 $117,057 (7%) 0% 91% 128% 8.9x 9.5x 15.1x 17.2x 14.3x Halliburton Company $35,340 $45,090 (9%) 6% 88% 148% 6.8x 8.7x 16.0x 22.4x 13.7x Baker Hughes Incorporated $20,710 $19,826 (5%) (13%) 83% 129% 8.8x 15.3x na na 15.5x Weatherford International plc $5,135 $11,916 0% (47%) 50% 122% 9.0x 18.4x na na 13.4x

Min (9%) (47%) 50% 122% 6.8x 8.7x 15.1x 17.2x 13.4x Median (6%) (6%) 85% 128% 8.8x 12.4x 15.6x 19.8x 14.0x Max 0% 6% 91% 148% 9.0x 18.4x 16.0x 22.4x 15.5x

0%20%40%60%80%

100%120%

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Mar

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Large-Cap Oilfield Services -10.1% S&P 500 +4.7%

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Large-Cap Oilfield Services -3.2% S&P 500 +82.9%

10-year avg: 10.3x 5-year avg: 10.4x 2-year avg: 12.3x

13.1x 10.6x

9.4x

6.4x

11.4x 10.8x

6.8x 8.1x

9.5x 7.6x

19.7x

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

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

8

Market Data



Source: Capital IQ

MID-CAP OILFIELD SERVICES

Stock Performance LTM Multiple Evolution Forward Multiples


Mkt. Cap EV 1 Month 1 Year % of High % of Low 1 Yr. Ago 6 Mos. Ago Current 2016E 2017P Mid-Cap Oilfield Services

Superior Energy Services, Inc. $2,329 $3,377 (12%) 2% 77% 186% 4.9x 7.7x 24.5x na 12.0x TETRA Technologies, Inc. $524 $1,288 (11%) (20%) 60% 122% 9.2x 7.6x 8.7x 9.9x 6.8x Ensign Energy Services Inc. $1,148 $1,813 (2%) (15%) 75% 159% 4.8x 6.1x 7.7x 10.2x 8.2x Calfrac Well Services Ltd. $327 $1,142 (13%) (31%) 67% 267% 5.4x na na na 18.2x Basic Energy Services, Inc. $23 $942 (21%) (88%) 11% 147% 5.6x na na na na Trican Well Service Ltd. $438 $661 (2%) 33% 80% 660% 7.3x na na na 15.6x

Min (21%) (88%) 11% 122% 4.8x 6.1x 7.7x 9.9x 6.8x Median (12%) (17%) 71% 172% 5.5x 7.6x 8.7x 10.0x 12.0x Max (2%) 33% 80% 660% 9.2x 7.7x 24.5x 10.2x 18.2x

0%20%40%60%80%

100%120%

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Mid-Cap Oilfield Services -7.8% S&P 500 +4.7%

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Mid-Cap Oilfield Services -59.4% S&P 500 +82.9%


10.5x

7.2x 7.8x 5.7x

11.7x

8.1x 5.9x

8.2x 10.4x

6.5x

18.1x

0.0x2.0x4.0x6.0x8.0x

10.0x12.0x14.0x16.0x18.0x20.0x

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

9



Source: Capital IQ

OIL & GAS EQUIPMENT



Mkt. Cap EV 1 Month 1 Year % of High % of Low 1 Yr. Ago 6 Mos. Ago Current 2016E 2017P Oil & Gas Equipment

National Oilwell Varco, Inc. $12,410 $14,029 (6%) (18%) 77% 128% 5.3x 7.9x na na 23.1x FMC Corp. $6,395 $8,344 2% 19% 95% 148% 13.3x 10.1x 13.1x 11.9x 10.6x Oil States International Inc. $1,467 $1,499 (13%) (5%) 78% 133% 6.0x 7.7x 15.0x na 19.3x Dril-Quip, Inc. $1,914 $1,422 (12%) (24%) 74% 104% 7.7x 6.7x 5.7x 10.0x 18.8x


0%20%40%60%80%

100%120%

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Oil & Gas Equipment -4.6% S&P 500 +4.7%

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Oil & Gas Equipment -14.8% S&P 500 +82.9%


11.5x

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

10



Source: Capital IQ

LAND DRILLERS



Mkt. Cap EV 1 Month 1 Year % of High % of Low 1 Yr. Ago 6 Mos. Ago Current 2016E 2017P Land Drillers

Nabors Industries Ltd. $2,723 $5,971 (3%) (9%) 78% 195% 4.9x 5.7x 11.8x 9.9x 8.6x Helmerich & Payne, Inc. $6,245 $5,821 (8%) 9% 82% 144% 4.7x 4.8x 8.5x 13.1x 16.2x Patterson-UTI Energy Inc. $2,801 $3,418 (5%) 27% 86% 173% 4.1x 4.7x 10.0x 17.6x 13.6x Precision Drilling Corporation $1,457 $3,051 (13%) (13%) 64% 146% 6.5x 9.2x 16.0x 13.0x 10.1x Pioneer Energy Services Corp. $212 $585 (5%) 23% 65% 345% 3.7x 4.3x 11.8x na 13.3x

Min (13%) (13%) 64% 144% 3.7x 4.3x 8.5x 9.9x 8.6x Median (5%) 9% 78% 173% 4.7x 4.8x 11.8x 13.1x 13.3x Max (3%) 27% 86% 345% 6.5x 9.2x 16.0x 17.6x 16.2x

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Land Drillers +19.7% S&P 500 +4.7%

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Land Drillers -14.9% S&P 500 +82.9%


7.0x

4.7x 5.7x

4.2x

8.5x 7.5x

4.4x 5.3x

6.1x

4.2x

8.2x

0.0x1.0x2.0x3.0x4.0x5.0x6.0x7.0x8.0x9.0x

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

11



Source: Capital IQ

LARGE-CAP POWER SERVICES & EQUIPMENT



Mkt. Cap EV 1 Month 1 Year % of High % of Low 1 Yr. Ago 6 Mos. Ago Current 2016E 2017P Large-Cap Power Services & Equipment

Siemens Aktiengesellschaft $84,102 $99,090 (1%) 22% 95% 134% 10.0x 8.8x 10.5x 9.6x 8.8x Honeywell International Inc. $89,815 $96,879 (1%) 13% 95% 125% 11.4x 9.6x 12.1x 11.5x 10.8x ABB Ltd. $43,698 $45,347 2% 18% 97% 135% 9.8x 9.0x 10.2x 9.8x 8.8x Schneider Electric SE $34,707 $40,382 (1%) 5% 94% 131% 12.2x 9.1x 10.4x 10.2x 9.5x Emerson Electric Co. $32,878 $36,644 (7%) 9% 90% 124% 9.3x 8.2x 9.2x 9.8x 9.8x Eaton Corporation plc $28,520 $36,483 (8%) 10% 91% 135% 11.2x 9.8x 11.4x 10.9x 10.5x

Min (8%) 5% 90% 124% 9.3x 8.2x 9.2x 9.6x 8.8x Median (1%) 12% 95% 133% 10.6x 9.1x 10.4x 10.0x 9.6x Max 2% 22% 97% 135% 12.2x 9.8x 12.1x 11.5x 10.8x

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Large-Cap Power Services & Equipment +21.2%

S&P 500 +4.7%

0%50%

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Large-Cap Power Services & Equipment +79.9%

S&P 500 +82.9%


9.8x 10.9x

8.6x 7.3x

9.7x 9.2x 9.0x

10.9x 10.9x 10.1x 10.2x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

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

12



Source: Capital IQ

MID-CAP POWER SERVICES & EQUIPMENT



Mkt. Cap EV 1 Month 1 Year % of High % of Low 1 Yr. Ago 6 Mos. Ago Current 2016E 2017P Mid-Cap Power Services & Equipment

Ametek Inc. $10,943 $12,629 (3%) (13%) 82% 109% 12.9x 12.8x 12.0x 12.7x 12.0x Hubbell Inc. $5,685 $6,385 (4%) 7% 92% 125% 10.4x 8.8x 10.8x 11.1x 10.4x Valmont Industries, Inc. $2,895 $3,312 (2%) 23% 87% 137% 9.1x 8.8x 10.6x 9.6x 9.2x Littelfuse Inc. $2,841 $3,025 4% 34% 96% 145% 12.2x 10.4x 14.8x 13.7x 11.8x AZZ incorporated $1,668 $1,981 (3%) 20% 94% 137% 9.5x 9.4x 11.4x 11.8x 10.6x Badger Meter Inc. $957 $1,003 (4%) 10% 84% 125% 15.1x 14.3x 13.8x 14.5x 13.0x ESCO Technologies Inc. $1,164 $1,210 1% 24% 97% 144% 12.8x 11.5x 13.1x 11.5x 10.8x Thermon Group Holdings, Inc. $587 $605 (8%) (19%) 79% 128% 10.2x 10.7x 10.7x 9.6x 10.8x

Min (8%) (19%) 79% 109% 9.1x 8.8x 10.6x 9.6x 9.2x Median (3%) 15% 90% 133% 11.3x 10.6x 11.7x 11.7x 10.8x Max 4% 34% 97% 145% 15.1x 14.3x 14.8x 14.5x 13.0x

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Mid-Cap Power Services & Equipment +13.0%

S&P 500 +4.7%

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Mid-Cap Power Services & Equipment +117.4%

S&P 500 +82.9%


11.9x 12.1x 10.7x

9.3x 10.1x 9.6x

10.7x 11.6x 11.6x 11.3x 11.7x

0.0x

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6.0x

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10.0x

12.0x

14.0x

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

13


Historical EV/LTM Revenue

Source: Capital IQ

ENERGY EFFICIENCY & CLEANTECH



Mkt. Cap EV 1 Month 1 Year % of High % of Low 1 Yr. Ago 6 Mos. Ago Current 2016E 2017P Energy Efficiency & CleanTech

SolarCity Corporation $1,755 $5,009 (26%) (64%) 30% 108% na na na na na Itron, Inc. $2,019 $2,237 11% 74% 97% 181% 12.9x 10.6x 11.2x 11.1x 9.6x Silver Spring Networks, Inc. $709 $596 (1%) 2% 84% 143% na 5.4x 6.9x na 21.1x Ameresco, Inc. $235 $470 3% (17%) 71% 129% 11.8x 11.7x 10.1x 9.1x 8.3x Sunworks, Inc. $60 $54 (16%) (20%) 62% 136% na na 15.1x 6.1x 4.0x EnerNOC, Inc. $173 $191 (2%) (39%) 56% 189% 4.1x na na na na


0%

50%

100%

150%

Sep-

15

Oct

-15

Nov

-15

Dec-

15

Jan-

16

Feb-

16

Mar

-16

Apr-

16

May

-16

Jun-

16

Jul-1

6

Aug-

16

Sep-

16

Energy Efficiency & CleanTech +24.6% S&P 500 +4.7%

0%

50%

100%

150%

200%

Sep-

11

Jan-

12M

ay-1

2

Sep-

12

Jan-

13M

ay-1

3

Sep-

13

Jan-

14M

ay-1

4

Sep-

14

Jan-

15M

ay-1

5

Sep-

15

Jan-

16M

ay-1

6

Energy Efficiency & CleanTech -8.7% S&P 500 +82.9%

5-year avg: 4.3x 2-year avg: 5.4x

0.0x1.0x2.0x3.0x4.0x5.0x6.0x7.0x8.0x9.0x

2011 2012 2013 2014 2015 2016 YTD

14



Source: Capital IQ

LARGE-CAP INFRASTRUCTURE SERVICES



Mkt. Cap EV 1 Month 1 Year % of High % of Low 1 Yr. Ago 6 Mos. Ago Current 2016E 2017P Large-Cap Infrastructure Services

Chicago Bridge & Iron Company N.V. $2,837 $4,571 (18%) (37%) 59% 100% 5.5x 5.0x 4.2x 5.0x 5.0x Fluor Corporation $6,773 $6,734 (6%) 7% 87% 123% 5.5x 4.8x 6.4x 6.6x 6.3x Jacobs Engineering Group Inc. $6,070 $5,942 (7%) 26% 89% 143% 7.5x 6.7x 8.8x 8.9x 8.3x SNC-Lavalin Group Inc. $8,066 $7,464 (5%) 36% 92% 147% 11.0x 8.3x 10.5x 12.2x 10.1x

Min (18%) (37%) 59% 100% 5.5x 4.8x 4.2x 5.0x 5.0x Median (7%) 17% 88% 133% 6.5x 5.9x 7.6x 7.7x 7.3x Max (5%) 36% 92% 147% 11.0x 8.3x 10.5x 12.2x 10.1x

0%

50%

100%

150%

Sep-

15

Oct

-15

Nov

-15

Dec-

15

Jan-

16

Feb-

16

Mar

-16

Apr-

16

May

-16

Jun-

16

Jul-1

6

Aug-

16

Sep-

16

Large-Cap Infrastructure Services +3.3% S&P 500 +4.7%

0%50%

100%150%200%250%

Sep-

11

Jan-

12M

ay-1

2

Sep-

12

Jan-

13M

ay-1

3

Sep-

13

Jan-

14M

ay-1

4

Sep-

14

Jan-

15M

ay-1

5

Sep-

15

Jan-

16M

ay-1

6

Large-Cap Infrastructure Services +17.0%

S&P 500 +82.9%


17.0x

19.9x 17.1x

7.9x 7.9x 10.0x

7.7x

10.8x 10.8x

6.9x 7.5x

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

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

15



Source: Capital IQ

MID-CAP INFRASTRUCTURE SERVICES



Mkt. Cap EV 1 Month 1 Year % of High % of Low 1 Yr. Ago 6 Mos. Ago Current 2016E 2017P Mid-Cap Infrastructure Services

Amec Foster Wheeler plc $2,086 $3,162 2% (33%) 63% 166% 12.4x 10.4x 9.1x 9.1x 9.0x Tutor Perini Corporation $999 $1,706 (11%) 14% 78% 200% 8.1x 10.9x 8.8x 6.1x 5.5x Granite Construction Incorporated $1,831 $1,647 (4%) 33% 90% 163% 10.5x 6.4x 9.9x 10.2x 7.6x Primoris Services Corporation $991 $1,144 10% (2%) 76% 119% 7.0x 8.0x 8.2x 8.3x 6.3x KBR, Inc. $2,025 $1,271 (8%) (19%) 71% 122% na 4.9x 3.7x 4.1x 4.2x Great Lakes Dredge & Dock Corporation $223 $577 (3%) (32%) 62% 124% 7.8x 8.5x 8.2x 7.0x 5.4x Aecon Group Inc. $1,013 $1,199 (7%) 31% 92% 138% 6.0x 8.0x 7.8x 6.7x 6.0x


0%

50%

100%

150%

Sep-

15

Oct

-15

Nov

-15

Dec-

15

Jan-

16

Feb-

16

Mar

-16

Apr-

16

May

-16

Jun-

16

Jul-1

6

Aug-

16

Sep-

16

Mid-Cap Infrastructure Services -2.5% S&P 500 +4.7%

0%50%

100%150%200%250%

Sep-

11

Jan-

12M

ay-1

2

Sep-

12

Jan-

13M

ay-1

3

Sep-

13

Jan-

14M

ay-1

4

Sep-

14

Jan-

15M

ay-1

5

Sep-

15

Jan-

16M

ay-1

6

Mid-Cap Infrastructure Services +42.5% S&P 500 +82.9%

10-year avg: 9.1x 5-year avg: 9.2x 2-year avg: 10.2x14.3x

12.6x

7.2x

4.8x 6.3x

8.7x 7.0x

9.1x 10.5x

12.1x

8.0x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

16.0x

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

16



Source: Capital IQ

UTILITY SERVICES



Mkt. Cap EV 1 Month 1 Year % of High % of Low 1 Yr. Ago 6 Mos. Ago Current 2016E 2017P Utility Services

Quanta Services, Inc. $3,766 $4,010 (2%) 0% 92% 149% 9.4x 10.3x 9.5x 7.2x 6.2x MasTec, Inc. $2,284 $3,344 (9%) 52% 89% 223% 7.6x 10.2x 12.3x 7.6x 6.6x MYR Group, Inc. $473 $494 (1%) 3% 94% 158% 6.2x 6.2x 6.9x 6.8x 6.0x

Min (9%) 0% 89% 149% 6.2x 6.2x 6.9x 6.8x 6.0x Median (2%) 3% 92% 158% 7.6x 10.2x 9.5x 7.2x 6.2x Max (1%) 52% 94% 223% 9.4x 10.3x 12.3x 7.6x 6.6x

0%

50%

100%

150%

Sep-

15

Oct

-15

Nov

-15

Dec-

15

Jan-

16

Feb-

16

Mar

-16

Apr-

16

May

-16

Jun-

16

Jul-1

6

Aug-

16

Sep-

16

Utility Services +16.9% S&P 500 +4.7%

0%50%

100%150%200%250%

Sep-

11

Jan-

12M

ay-1

2

Sep-

12

Jan-

13M

ay-1

3

Sep-

13

Jan-

14M

ay-1

4

Sep-

14

Jan-

15M

ay-1

5

Sep-

15

Jan-

16M

ay-1

6

Utility Services +59.0% S&P 500 +82.9%

10-year avg: 9.8x 5-year avg: 7.9x 2-year avg: 7.5x15.6x 15.6x

11.5x

9.0x 8.4x 9.1x 8.1x 7.6x 7.6x

6.8x 8.2x

0.0x2.0x4.0x6.0x8.0x

10.0x12.0x14.0x16.0x18.0x

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

17



Source: Capital IQ

INDUSTRIAL SERVICES



Mkt. Cap EV 1 Month 1 Year % of High % of Low 1 Yr. Ago 6 Mos. Ago Current 2016E 2017P Industrial Services

EMCOR Group Inc. $3,448 $3,532 (0%) 21% 96% 137% 8.2x 7.6x 9.2x 9.0x 8.3x Bilfinger SE $1,223 $1,550 3% (20%) 61% 110% na na na 9.3x 10.3x Team, Inc. $866 $1,226 (9%) (31%) 68% 136% 10.0x 9.8x 17.4x 10.8x 7.9x Aegion Corporation $578 $853 (5%) (6%) 78% 109% 7.0x 6.5x 7.5x 7.8x 6.1x Mistras Group, Inc. $743 $826 (3%) 69% 90% 189% 12.3x 7.3x 10.4x 9.8x 9.1x Matrix Service Company $484 $412 4% (21%) 69% 129% 12.5x 9.9x 6.5x 6.6x 5.4x


0%20%40%60%80%

100%120%

Sep-

15

Oct

-15

Nov

-15

Dec-

15

Jan-

16

Feb-

16

Mar

-16

Apr-

16

May

-16

Jun-

16

Jul-1

6

Aug-

16

Sep-

16

Industrial Services -3.6% S&P 500 +4.7%

0%50%

100%150%200%250%

Sep-

11

Jan-

12M

ay-1

2

Sep-

12

Jan-

13M

ay-1

3

Sep-

13

Jan-

14M

ay-1

4

Sep-

14

Jan-

15M

ay-1

5

Sep-

15

Jan-

16M

ay-1

6

Industrial Services +64.2% S&P 500 +82.9%

10-year avg: 9.3x 5-year avg: 8.9x 2-year avg: 9.4x12.8x

11.5x

9.5x

7.8x 7.3x 7.9x 8.0x

9.3x 10.0x 9.4x 8.9x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

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

18

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.

Recent Successes

WE ACTED AS SOLE ADVISOR TO THE SELLER

HAS BEEN ACQUIRED BY

A PORTFOLIO COMPANY OF


A PORTFOLIO COMPANY OF

TO BE COMBINED WITH


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



Energy Team

CJ HummelManaging Director

Sam HillManaging Director

Reed MacyManaging Director

Ted KinsmanManaging Director

John GaensbauerManaging Director

David CharlesManaging Director

Ian FayManaging Director

Tim McEuenSenior Vice President

Luis MoyaSenior Vice President

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, Headwaters MB is headquartered in Denver, CO, with six 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:

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