11

Industrial ResearchSeptember 26, 2017

The Equity Analyst’s View

Andrew J. Wittmann, CFASenior Research Analystawittmann@rwbaird.com414.298.1898

Justin P. HaukeSenior Research Associatejhauke@rwbaird.com314.445.6519

Please refer to Appendix – Important Disclosures and Analyst Certification on pages 52-54

22

Agenda

Overview of Baird and our E&C Research Team…….. Page 3

High-Level Industry Overview…..........................…… Page 10

What Analysts Look For & Getting Disclosure Right Page 16

Backlog Update………………………………….……………… Page 28

Balance Sheet and M&A Perspectives………………….. Page 33

View From the Public Markets…………………………….. Page 45

Industrial Services

33

Baird Overview

44

Baird has been helping clients achieve their asset management, investment banking and private equity goals for nearly 100 years.

1919Founded in Milwaukee

Employee-owned since 2004>60% of employees own stock

>$170 billionAssets under management (as of 12/31/16)

>$1.3 billion2016 revenue*

~3,300 employeesBaird employment +24% over past 5 years

100+ Office locations on three continents**

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14 consecutive years of recognition 4 straight years among top 10 companies

Baird’s International Presence

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Chicago Milwaukee New York London Frankfurt Hong Kong San Francisco Palo Alto Atlanta Boston Washington, D.C. Tampa Stamford Charlotte Nashville St. Louis Shanghai

* Financial results do not reflect the consolidation of certain private equity partnerships.**Baird and its operating affiliates have offices in the United States, Europe and Asia. Robert W. Baird Ltd. and Baird Capital Partners Europeare authorized and regulated in the UK by the Financial Services Authority.

Capital Markets

Private Wealth

Management

AssetManagement

A Comprehensive Financial Services Firm

Private Equity

Overview of Baird

Baird Equity Capital Markets

55

Quality

• No. 1 “Overall Quality in Sales, Corporate Access and Research” 1

• No. 1 “Overall Important SMID Research Advisory Firm”

• No. 1 “Overall Sales and Corporate Access Quality”

• No. 1 “Trading Service Intensity”1

• No. 4 on Fortune’s 2017 100 Best Companies To Work For®

A Trusted Equity Capital Markets Partner

1 Greenwich Associates U.S. Equity Investors – Small/Mid-Cap Funds, May 2017. Rankings for qualitative metrics are based on leading research firms in survey.

Industrial Services

Baird Research Coverage

Source: Baird Research

284333

365403 424

457506 497

535

616 633671 695 713 723 727 703

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400

500

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800

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

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66

Baird’s Engineering and Construction Research TeamAndrew J. Wittmann, CFA Director, Senior Research Analyst

Andy brings 12 years of experience in sell side research and is the recipient ofnumerous professional recognitions. Frequently quoted in the financial press andindustry magazines, Andy brings a differentiated perspective to his researchthough extensive industry contacts which inform his bottoms-up view of hissectors. In both 2015 and 2016, Andy was recognized by StarMine for earningsestimating accuracy in commercial and consumer services. In 2014, Andrew wasagain recognized by StarMine in its survey of America’s Best Stock Analysts asthe No. 3 stock picker in Commercial Services & Supplies and Construction &Engineering. In 2013, Greenwich Associates/Bloomberg recognized him in itssurvey of America’s best stock analysts, while winning two other Starmineawards for earnings accuracy. Previously, Andy was a systems design engineerwith Ford Motor Company and has earned an MBA from Indiana University, anMS in Engineering with an Applied Statistics focus from Purdue University, and aBS in Mechanical Engineering from the University of Wisconsin-Madison. He holdsa Chartered Financial Analyst designation.

Justin P. Hauke Vice President, Senior Research Associate

Justin Hauke is a member of Baird’s Facility and Industrial Services team. Priorto joining Baird in 2008, Justin was a senior economic analyst at the FederalReserve Bank of St. Louis and a policy analyst at the Show-Me Institute, aMissouri public policy think tank. Justin received an MS in Finance fromWashington University in St. Louis and a BA in Economics and Mathematics fromthe University of Texas at Austin.

Industrial Services

Baird’s Industrial Services researchcoverage leverages related areas of focusincluding:

• Process Controls (Halloran)• Aerospace & Defense (Arment)• Diversified Industrial & Machinery (Dobre)• Exploration & Production (Katzenberg)• Master Limited Partnerships (Bellamy)• Energy Technology (Kallo)

•Total Research Network of 110+ Analysts

77Industrial Services

Industry Checks

• Relationships with key E&C executives• Building our network

Public Company

Disclosures

• Press releases / SEC filings• Management access

External Information

Sources

• News articles / industry publications• Pay-for subscription services

Macro Overlay

• Baird’s 40 experienced analyst teams• Diverse inputs and macro-level resources

Experience • 10 years dedicated E&C sector specialization• Practical engineering experience

Differentiated and Award Winning Research

Baird’s Research Process: INPUTS

88Industrial Services

Detailed Models & Forecasts

•Updates on at least 9 companies•Regularly updated industry perspectives

Differentiated Perspectives

•Conference calls with industry experts•Deeper fundamental insights

Management Access

•Historical results provide perspectives• Forecasts help set expectations

Project Tracking Database

•Best in-class investor conferences•Direct management-to-investor contact

Written Research Reports

•All markets, all projects, everywhere•Massive proprietary project database

Differentiated and Award Winning Research

Baird’s Research Process: OUTPUTS

99

Written Research Samples

Hyperlinks to key notes from Baird’s research library*

E&C E&C Update: Execution Challenges Reinvigorate Risk Appreciation (8/21/2017)

JEC Incremental Confidence in CH2M Transaction (8/24/2017)

ACM Great Cash Flow but Long-Term Earnings Power Matters (8/8/2017)

JEC ch2m: Good Strategic Fit, High Purchase Price (8/2/2017)

E&C Proprietary Pipeline Contractor Survey Shows Strong Gains (7/31/2017)

FLR Tough Times Don't Last Forever (8/3/2017)

E&C E&C Employment and Construction Cost Snapshot: May 2017 (6/2/2017)

E&C E&C Channel Checks: There Really Is Growth Out There (4/24/2017)

E&C E&C Channel Checks: Less Growth, More M&A (E&Y Conference Recap) (10/3/2016)

E&C E&C Speaker Series: E&C Investing Thoughts from a CFO (7/19/2016)

E&C E&C Checks: "Other than Energy, Mrs. Lincoln, the Market Is Good“ (4/22/2016)

E&C E&C Hat-Trick: Relief Rallies, Trading Opportunities and "Zombie" Backlog (3/14/2016)

E&C Dreaming of a Burning Backlog Just Like the Ones We Used to Know (12/15/2015)

E&C E&C Speaker Series: Electric T&D Outlook Remains Good with Slowing Growth (9/21/2015)

E&C E&C Speaker Series Takeaways: Mike Lucki, Former CFO of CH2M HILL (7/14/2014)

* If you would like to receive all our E&C research reports directly to your email inbox please email me at awittmann@rwbaird.com

Industrial Services

1010

Industry Overview

1111

E&CLife Cycle

Earlier Stages

Later Stages

Niche / Entrepreneurial• Niche service offerings• Revenue: ~$0-~$100M• Rapid earnings growth• Local geographic exposure• FCF use: Growth/WC

Management Dilemma: Finding customers

Expansionary• Revenue: ~$100M-~$1B• Good earnings growth• Service/geo expansion• Small scale M&A• FCF use: Growth/WC• Examples: NVEE, TRR, AGX

• Management Dilemma:“Stuck in the middle”

Later• Revenue: ~$1B-~$5B• Slower earnings growth• Significant diversification• More geographic expansion• M&A increases in size/risk• FCF: M&A, perhaps return• Examples: AMFW, STN, TTEK,

CH2M

• Management Dilemma:Culture/vision

Mature• Revenue: ~$5B+• Growth more difficult• Diversified services• Diversified geographies• Large scale M&A needed • FCF: Dividend/Buyback• Project/geographic/M&A risk

often increases seeking historical growth rates

• Risk event often leads to business simplification strategy

• Examples: ACM, JEC, WOR

• Management Dilemma: Capital Allocation/Culture/Growth

E&C Company Life Cycle Illustration

Source: Baird Research

1212

Market Exposure and Contract Structure Characterize Risk

Industrial Services

Inside E&Cs you can pick your desired level of economic leverage and project risk

LOWER RISK / LOWER BETA(more government)

HIGHER RISK / HIGHER BETA(more oil and gas)

Note: As of most recently reported fiscal year

Examples of “Risk” Contracts :

Fixed Price/Lump-Sum, Turnkey/Unit Price –Contract bid specifies a “fixed” $ cost of delivery withcontractor responsible for any cost increases

Guaranteed Maximum – Contract specifies a“guaranteed maximum” price, allowing for inflationescalators/adjustments up to a maximum fixed-price

Examples of “Not at Risk” Contracts:

Cost-Reimbursable – Contract costs are fullyreimbursable to the contractor, with a guaranteednegotiated fixed-rate margin (“multiplier”)

T&M (Time & Materials) – Contract specifies afixed-rate margin mark-up “margin” above cost oftime (labor) and materials (procurement) – other costsfixed

E&C End Market Mix (% of Total Revenue/Backlog)

Source: Company reports (as of most recently completed fiscal year) and Baird estimates

0%

20%

40%

60%

80%

100%

KBR CBI FLR MTZ PWR TTEK JEC ACM BW MYRG

Government

Power

Industrial &Infrastructure

Oil & Gas

E&C Contract Mix (% of Total Revenue/Backlog)

Note: Fixed-price design work bares less financial risk than fixed-price construction work and thus may artificially inflate risk exposure at ACM/TTEK

Source: Company reports (as of most recently completed fiscal year) and Baird estimates

0%

20%

40%

60%

80%

100%

PWR CBI BW MTZ ACM MYRG TTEK FLR JEC KBR

Not at Risk

At Risk

1313Industrial Services

E&C Stocks: Cyclical Investments

Source: Baird Research

E&C stocks are cyclical investments and are generally not well-suited to a buy-and-hold strategy

Timeline for owning stocks

Back

log

Driv

ers

Commodity Prices(especially oil)

Capital Availability (credit, tax, bonds, PPP)

Construction Costs

Economic Visibility

Aggregate Demand

Backlog Growth

Multiple Expansion

Earnings Approach

Peak

Backlog Declines & Multiples Contract

1414

• Challenges: Oil and gas still weighs on backlog

• Bright spots: Government work (both S&L and Federal)

• Project execution in focus – charges were rampant

• M&A returning in a big way – hollowing out the middle

Engineering and Construction Update: September 2017

1515

Context for Key E&C End Markets: September 2017

Industrial Services

E&Cs are historically later-cycle stocks that benefit as new levels of aggregate demand create investment

Outlook Sector Drivers Baird Outlook

Ener

gy &

M

inin

g

Oil & Gas

* Commodity prices* Global economic demand/growth* E&P, NOC, integrated oil/mining capex budgets* Crack spreads, capacity utilization, maintenance* Regulatory environment / environmental controls

* Trump deregulation; Cabinet appointments. Pipes have and likely will fare best* Supply rationalization less smooth than expected, oil price volatility* Petrochemical investment is rebounding, new projects advancing* LNG studies not advancing, some projects have seen challenges, prices low* New international investment agreements with China/Saudi, some awards* Mining capex dollars now flowing off of very low base, may build in 2018

Indu

stria

l &

Infra

stru

ctur

e

Industrial & Infrastructure

* Urbanization, population growth, economic growth* Government budgets (federal, state, local)* Stimulus/politics* Aging infrastructure/replacement cycle* Economic multiplier impact

* Infrastructure was positive in 2016 and remains so YTD in 2017* Federal stimulus increasingly unlikely (in 2017), previously considered option* FAST Act: $305B, 5-year federal highway bill (first since 2006) provides certainty* State/local tax receipts have recovered, 2016 bond/tax measures help* Commercial/Industrial construction remains steady, particularly speciality work

Gov

ernm

ent

Government

* Government budgets/politics* Outsourcing trends, organizational conflicts of interest* Security threats* International aid/nation building* New technology threats (cyber)

* Prior 2013-2014 budget control actions abated, DOD seeing surge in activity* Recent MATOC award environment has improved; protest bids increasing* ISIS/North Korea/Iran could drive increased DOD spend* Investment in cyber security, foreign procurment of US hardware and IT spending* Environmental support services in US and the UK (in particular) is healthy

Pow

er

Power

* Electricity demand (population, economic growth)* Environmental regulation (pollution contols, RPS)* Replacement cycle (aging fleet assets)* Regulatory incentives/FERC rule changes (T&D)* New technology (storage, distributed generation)

* Roll-back of environmental rules, particularly EPA Clean Power Plan + Paris Accord* Load demand remains weak with threat from distributed generation* Electric transmission permitting could advance with new FERC quorum* Focus has been combined-cycle gas/renewables. Coal/nuclear retirements/retrofits* Highly competitive market for E&Cs. Many project charges against ~2014-2016 bids

Ove

rall

Overall

* Mixed outlook, though non-commodity focused markets offer best gains in years* Infrastructure (transportation, water, government, power) are in upcycle* Smaller energy award catalysts today; larger projects still a few years off* Valuation retreat has not matched estimate cuts despite sector underperformance* M&A is making a comeback, several deals announced an/or pending. More likely.

Source: Baird research

End Market

1616

What Analysts Look For & Getting Disclosure Right

1717

What do analysts look for? - Overview

When evaluating results key considerations include:

•EPS (versus the consensus expectation)

•Backlog (want book-to-bill greater than 1x)

•Margin (as percentage of revenue)

•Quality of earnings (see next slide)

•Revenue versus prior quarter (adjusted for seasonality), prior year, and expectations

•Cash flow from operations, adjusted for JV accounting

•Working capital changes in particular Accounts Receivable and Unbilled AR (indicationsof problem contracts)

•Leverage and balance sheet flexibility (more on this later)

Industrial Services

E&C financial statements are complex and the businesses largely opaque

1818

What do analysts look for? – Quality of Earnings

When evaluating quality of earnings key considerations include:

• Net operating losses applied to lower the reported tax rate

• Reversals of earn out consideration from M&A deals which books as a gain to EPS

• Asset sales triggering one-time accounting gains

• Legal settlements, particularly those associated with acquired companies

• “Normal margin” booked as “gross margin” as a result of purchase accounting

• Sequential increase in unapproved change orders and/or claims

• Net impact of percentage of completion profit adjustments in the period

• Performance of “known problem contracts” in the period

• Write offs of bad debt or receivables

Industrial Services

Yes, the good analysts actually read the footnotes and the MD&A!

1919

What do analysts look for? – Quality of Earnings

Industrial Services

A case study in the quality of earnings

Unusual Items Summary - EPS Reconciliation

F1Q15 F2Q15 F3Q15 F4Q15 F2015 F1Q16 F2Q16 F3Q16 F4Q16 F2016 F1Q17 F2Q17 F3Q17 F4Q17E F2017EAdjusted EPS $0.80 $0.58 $0.74 $0.95 $3.08 $0.68 $0.87 $0.81 $0.65 $0.53 $0.89 $0.78 $0.67 2.86$

- One-Time Tax Benefits -$ (0.05)$ -$ (0.13)$ (0.10)$ (0.28)$ (0.33)$ (0.11)$ (0.44)$ - Investment gains (0.04)$ (0.03)$ (0.07)$ -$ (0.17)$ (0.17)$ - Accelerated recovery of government pension entitlement (0.14)$ (0.14)$ -$ - One-time project gain (0.07)$ (0.07)$ (0.21)$ (0.21)$ (0.12)$ (0.05)$ (0.17)$ - Other items (see footnotes) -$ (0.10)$ (0.03)$ (0.13)$ -$

Adjusted EPS, Excluding other one-time items 0.73$ 0.55$ 0.70$ 0.92$ 2.91$ 0.53$ 0.73$ 0.65$ 0.34$ 2.24$ 0.41$ 0.56$ 0.45$ 0.67$ 2.08$ - Normalized margin (0.09)$ -$ (0.02)$ (0.08)$ (0.19)$ (0.05)$ (0.05)$ (0.01)$ (0.01)$ (0.13)$ -$ -$ -$ -$ -$

Adj. Adjusted EPS, Excluding other items and normal margin 0.64$ 0.55$ 0.68$ 0.84$ 2.72$ 0.48$ 0.67$ 0.64$ 0.33$ 2.11$ 0.41$ 0.56$ 0.45$ 0.67$ 2.08$

Source: Company reports; Baird Research estimates

F2015 Items F2016 Items F2017 EPS Items

Unusual Items Summary - EBITDA ReconciliationF2017 EBITDA Items

F1Q15 F2Q15 F3Q15 F4Q15 F2015 F1Q16 F2Q16 F3Q16 F4Q16 F2016 F1Q17 F2Q17 F3Q17 F4Q17E F2017EReported Adjusted EBITDA 255 227 250 295 1,027 231 273 244 211 958 205 210 241 237 893

- Investment gains (9) (38) (47) 0 (48) (48)- Accelerated recovery of government pension entitlement 0 (45) (45) 0- One-time project gain (15) (15) (47) (47) (35) (11) (46)- Other items (see footnotes) 0 (20) (7) (27) 0

Operating Adjusted EBITDA, Excluding other one-time items 240 220 241 257 958 211 228 237 164 840 170 210 182 237 799- Normalized margin (24) (30) (6) (37) (97) (12) (12) (4) (4) (32) 0

Operating Adjusted EBITDA, After normal margin 216 190 235 220 862 199 216 233 160 808 170 210 182 237 799

Source: Company reports; Baird Research estimates

F2016 EBITDA ItemsF2015 EBITDA Items

2020

What do analysts look for? – Quality of Cash Flows

When evaluating quality of cash flow key considerations include:

• Working capital changes

• QOQ Change in amount of billed and unbilled receivables (problem contracts)

• Cash flows from unconsolidated JVs in the CFO section

• Cash flows from consolidated JVs in the CFF section

• Gross capex (before disposals) including purchased and capital leased amounts

• Capital expenditures, particularly as it relates to recognized depreciation levels

• Changes to bad debt reserves

• Footnotes indicating sale of receivables to aid AR collection

• Days sales outstanding – measure includes both billed and unbilled (also % of revenues)

• Amortization expense/schedule, big expense to acquisitive companies

Industrial Services

Yes, the good analysts actually read the footnotes and the MD&A!

2121

Disclosures and Transparency

Industrial Services

Quality disclosure and transparency builds long term investor trust

2222

Recommendations for Effective Disclosures

Proxy •Detail the metrics (and the calculations behind the metrics) on which incentives are based

•Tables and/or charts summarizing the total compensation by named executive officers

•Summary tables comparing any new changes to the compensation program

•Make clear any conflicts of interests or related-party dealings

Industrial Services

Yes, the good analysts read the footnotes and the MD&A!

AECOM CEO, President and CFO Incentive Compensation Comparison, F2017 versus F2016 (red font=change)

Metric Weighting Period Metric Weighting Period

Note: CEO/President CFO only. Other NEOs follow similar compensation structure, focused on segment performanceSource: Company Reports; Baird Research

F2016F2017

Adjusted EPS 50%

FCF/share 50%

Three-year vesting with

three one-year performance consideration (three-year for

TSR)

37.5%Long-Term

Incentive Equity: PEP Award

(60% of total)

Long-Term Incentive Equity:

RSU Award(40% of total)

Annual Short-Term Incentive

(payable in cash)

35%Adjusted Net Income

One-YearOne-YearOperating cash flow 35%

KPIs 30%

Adjusted EPS 35%

35%CFO/share

KPIs 30%

Adjusted EPS

FCF/share

Relative Total Stockholder Return

Three-year vesting with two one-year performance consideration

Three-year vesting

Three-year vesting100%

Time-based stock option grants, final value dependent upon AECOM's

stock price

Time-based stock option grants, final

value dependent upon

AECOM's stock price

100%

37.5%

25.0%

2323

Recommendations for Effective Disclosures

Income statement (including segment results)•Report unconsolidated equity in earnings from JV on separate line as part of EBIT

•Report D&A by segment in footnotes

•Report the net effect of all changes in POC estimation in the quarter

•Report any material or notable project POC adjustments separately with the old andnew percentage of complete

•Footnotes should list material and subcontractor costs for design-focused companies toenable calculation of “net” revenue

•Disclose an effective tax rate, net of any one-time items

•Explain why tax rate is not the effective tax rate if applicable

•Disclose inorganic revenue contribution (preferably by segment)

•Disclose impact of FX on reported revenue

Industrial Services

Yes, the good analysts read the footnotes and the MD&A!

2424

Recommendations for Effective Disclosures

Backlog•Needs a conservative metric noting only work that has BOTH a signed and funded contract

•Supplementary metrics can include option years, etc.

•Report backlog by reportable segment

•Disclose amount of backlog anticipated to convert to revenue over next 12 months

•Disclose how much backlog changed through acquisition/disposition

•Disclose the amount of cancelled backlog in the period

•More companies talking “gross margin” backlog – an idea for the future

Industrial Services

Yes, the good analysts read the footnotes and the MD&A!

2525

Recommendations for Effective Disclosures

Statement of Cash Flows•Disclose depreciation and amortization separately

•Disclose gross capex (in footnotes also disclose capitalized dollars for capital leases expendedduring the period)

•Do not net out asset dispositions from gross capital expenditures (report on separate line)

•Disclose the full cash flow statement in your press release, not just in your quarterly filing!

•Call out in footnotes any large individual pre-payments for new construction work

•At least once a year show the changes to the working capital accounts (quarterly preferred)

Industrial Services

Yes, the good analysts read the footnotes and the MD&A!

2626

Recommendations for Effective Disclosures

Balance sheet•Disclose claims/change order amounts which have been recognized as revenue

•Including any individual material items in detail

•Pension/retirement liabilities on a clean line

•How much cash is held overseas and planned for permanent reinvestment

•Always disclose billed and unbilled AR separately (same with payables side)

Industrial Services

Yes, the good analysts read the footnotes and the MD&A!

2727

Disclosure Lessons Learned The Hard Way

• Revisions to percentage of completion contracts

• Normal margin (which is anything but “normal”) – needs to be well explained ahead of time

• Purchase accounting related “balance sheet creep” during first 12 months owned

• Purchase accounting related reserves on acquired “problem” contracts

• Contract disputes and claims

• Disclose your on-going litigation items

• One-time items

Industrial Services

2828

Backlog Update

2929

E&C Index Backlog Burn Rate History (2008-Present)

Note: Burn rate defined as rolling twelve month sector revenue divided by sector back logThe E&C Index includes: ACM/URS, CBI/SHAW, FLR, JEC, KBR, MYRG, PWR, and TTEKSource: Company Reports; Baird Research

40%

45%

50%

55%

60%

65%

70%

75%

80%

Mar

-08

Jun-

08Se

p-08

Dec

-08

Mar

-09

Jun-

09Se

p-09

Dec

-09

Mar

-10

Jun-

10Se

p-10

Dec

-10

Mar

-11

Jun-

11Se

p-11

Dec

-11

Mar

-12

Jun-

12Se

p-12

Dec

-12

Mar

-13

Jun-

13Se

p-13

Dec

-13

Mar

-14

Jun-

14Se

p-14

Dec

-14

Mar

-15

Jun-

15Se

p-15

Dec

-15

Mar

-16

Jun-

16

Publicly traded backlog burn has slowed to a crawl

• “Zombie” backlog – not alive but not dead projects

• Mix toward longer-duration contracts

• More scope for Federal IDIQ added

• Longer permitting times, early bookings

• Non-GAAP metric, more management discretion

Industrial Services

Dreaming of a Burning Backlog…Just Like the Ones We Used to Know…

LyricsI'm dreaming of a burning backlogJust like the ones I used to know

Where the project's going and oil's flowingTo see welders in the glow

I'm dreaming of a burning backlogWith every research note I writeMay your jobs be timely and right

And may all your change orders be light

Each dollar of backlog is burning materially slower today than it was nearly a decade ago

3030

Backlog declined slightly

• Backlog peaked in 2014, has moved lower since

• 2Q17 BTB was <1x; Longest stretch in series history

• High Oil & Gas burn continues, no replacement

• Major project cancellations have pressured

• Growth potential rests in government/infrastructure

Industrial Services

Backlog Update (2Q17 Recap): New Awards Remain Modest

E&C Indexed Backlog, Average TTM Change

Note: The Index includes: ACM/URS, BKR, BWC (BW), CBI/SHAW, GVA, FLR, JEC, KBR, MDR, MYRG, PWR, TPC, and TTEKSource: Company reports and Baird Research

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

Ma

r-0

0Ju

n-00

Sep

-00

Dec

-00

Ma

r-0

1Ju

n-01

Sep

-01

Dec

-01

Ma

r-0

2Ju

n-02

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-02

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3Ju

n-03

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-03

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n-04

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-04

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5Ju

n-05

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-05

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-05

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6Ju

n-06

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7Ju

n-07

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-07

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-07

Ma

r-0

8Ju

n-08

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-08

Ma

r-0

9Ju

n-09

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Ma

r-1

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Ma

r-1

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n-11

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3Q14 represented peak backlogwithin our index.

Backlog has been generallytrending lower since.

E&C Industry Book to Burn Ratio (Orders / Revenue)

Note: The Index includes: ACM/URS, BKR, BWC (BW), CBI/SHAW, GVA, FLR, JEC, KBR, MDR, MYRG, PWR, TPC, and TTEKSource: Company reports and Baird Research

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x

Sep-01 Mar-03 Sep-04 Mar-06 Sep-07 Mar-09 Sep-10 Mar-12 Sep-13 Mar-15 Sep-16

BTB = 1.0x (flat)

2004-2008 Average BTB = 1.3x

2009-2014 BTB Average = 1.0x

Order growth (BTB ratio)has generally been <1x

throughout current cycle.

Slight rebound in 3Q16reversed in 4Q16-2Q17

3131

E&C Backlog Growth (YOY Change): 2Q17 -- Organic (where available)

Note: Figures reflect most recent fiscal quarter and may not be directly comparable; discretionary adjustments appliedSource: Company reports and Baird Research

22.6%20.8%

11.8%8.4% 6.9%

4.0% 3.5%1.3%

-5.9% -6.4% -7.7% -8.1%

-20.6%-24.5%

-30%

-20%

-10%

0%

10%

20%

30%

Industrial Services

Backlog drivers – key updates:

• Mining clearly bottomed, green shoots beginning to mature a bit

• Energy has long-term potential, but only shorter-cycle recovery today

• Transportation benefiting from US FAST Act. Federal stimulus unlikely

• Government funding remains strong and steady (S&L and Federal)

• Power market seeing gas-fired plant awards, but very tough market

Backlog Update (2Q17 Recap): New Awards Remain Modest

E&C Sequential (QOQ Change) Backlog Growth: 2Q17-- Organic (where available)

Note: Figures reflect most recent fiscal quarter and may not be directly comparable; discretionary adjustments appliedSource: Company reports and Baird Research

18.3%

9.3%

5.4%

1.5% 0.5% 0.0%

-0.6%-2.0% -2.0% -2.6% -2.7%

-4.3%

-9.7%

-15.4%-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

A tale of Civil versus Oil and Gas

3232

Model Suggests:

• Our model accurately forecast the 2014 “peak” for backlog

• Sector multiples have historically tracked backloggrowth. General lack of “break out” growth has kept multiplesrange-bound, post-recession

• Recent divergence from model reflects two fundamentalissues: 1) large project cancellations (e.g., nukes); and 2)over-reliance to commodity markets across some E&Cs (heavyburn rate without replenishment)

• Easier comparisons should help. Still, headline backlogmay continue to trend lower until 2018.

Model Overview:

• Model attempts to forecast industry-wide backlogtrends, which determines the direction of sectormultiples

• Specifically, it forecasts the sequential change of TTMbacklog for the US E&Cs

• Multivariable regression with R-squared of 0.76 andall five factors statistically significant at a 5% level

• Inputs include oil prices, and macroeconomic indicators of construction activity and credit availability

Note: Regression analysis as of the end of 2Q17 earnings season (August 2017)

Proprietary Baird E&C Backlog Forecasting ModelBaird Backlog Forecasting Model: U.S. Public E&C Backlog Trends, TTM Sequential Backlog Change (%)

Source: Baird Research; Company reports

-4%

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Actual Backlog Data

Baird Model Prediction

R^2 = 0.76

The Baird model correctly forecasted the "peak" in backlog in 2014.

However, economic fundamentals haveincorrectly forecasted stronger backlog gains

than we are currently seeing.

Project cancellations and heavy commodityrevenue burn exlains this disconnect.

Industrial Services

3333

Balance Sheet and M&A Perspectives

3434

Balance Sheet Management History

Industrial Services

E&C Capital Deployment to Share Repurchase ($ millions)

Source: Baird Research, Company reports; FactSet Research Systems

$21 $39 $134 $16 $6 $15 $17$324

$895

$217

$810

$2,588

$1,190$918

$1,935

$2,654

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD

Share repurchases have beena much more extensive use of capitalthroughout the current cycle - sharp

contrast from 2004-2008 cycle

3535

Balance Sheet Management: Accounts Receivable

Industrial Services

Historical E&C DSOs

Note: DSO defined as: Accounts receivable plus contract work in progress, net of billings in excess of costs on uncompleted contractSource: Company reports

0

20

40

60

80

100

120

1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16 1Q17

ACM FLR JEC PWR TTEK

Working capital is an under-appreciated source of value creation potential, in our view

3636

Balance Sheet Management Perspectives

Capital allocation – Engineering Companies

• Returning excess cash to shareholders rarely is a bad thing

• Dividends for engineering houses

• Ideal capital structure: ~1-2x net debt/EBITDA

Capital allocation – Construction Companies

• Returning excess cash to shareholders rarely is a bad thing

• Buybacks are preferred for construction companies

• Ideal capital structure: prefer $0 net debt or modest net cash position

• Prefer seeing positive contract capital position

•(i.e., current assets > current liabilities)

Industrial Services

3737

M&A Perspectives: From the Analyst Seat

• The “middle” sized firm is going extinct

• Cash flow generative businesses with low capital intensity can be a devil’s curse

• Focus on returns and not on growth; growth does NOT equal value

• Goodwill is a difficult asset on which to generate a return

• Shrinking the business might be the best long-term option for shareholders

• Avoid going “up risk” to find growth (either by acquisition or project risk profile)

• Engineering companies buying construction companies have poor track record

• Revenue dis-synergies occur throuth conflicts and loss of key personnel

• Central question is: “How do customers win in the deal we’re contemplating?”

•Or: “why is the target better owned by us?””

•Value creation through cost synergies should be secondary, as target will get some/much of this

Industrial Services

3838

M&A Perspectives: Very Recent Deals

Deals since 2016; $10B+ Closing in 2H17 Alone

• Jacobs + CH2M

• WS Atkins + SNC Lavalin

• John Wood Group + AMEC Foster Wheeler

• TRC acquired by New Mountain Capital (PE)

• KBR + Wyle + Honeywell Technology

• Stantec + MWH

• Tetra Tech + Coffey

Industrial Services

3939

M&A Perspectives

Industrial Services

U.S. Public E&C M&A Investment ($M)

Note: Series includes ACM, BKR, BWC, CBI, FLR, FWLT, GVA, JEC, KBR, MDR, MYRG, PWR, SHAW (through 2012), TPC, TTEK, URSSource: Company reports, FactSet Systems

$329 $241 $532 $178 $252 $79

$1,139

$2,977

$1,557

$486

$1,960$1,762$1,725

$3,422$4,409

$466

$1,513

$78 ($8,000)

($6,000)

($4,000)

($2,000)

$0

$2,000

$4,000

$6,000

$8,000

$0$500

$1,000$1,500$2,000$2,500$3,000$3,500$4,000$4,500$5,000

Total E&C Cash M&A Investment, left

Total E&C Net Cash, right

Watch fora spikein 2H17

deal cashflow

In 2012 Top 10 players owned 42% of the market

4040

M&A Perspectives

Industrial Services

Also see July 19, 2014 Research Note: Engineering and Construction: M&A Perspectives

The S&P 500 Doubled Since 12/31/2010

E&C Value Creation through M&A: Total Baird Coverage, 2010-2017 YTD

Note: Figure includes total combined value for the following tickers: ACM, CBI, JEC, PWR, MTZ, TTEK

Source: Company reports and Baird Research

$15,560

$14,876

$1,269

$31,705

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

12/31/2009EV

M&A Change in Value 6/30/2017EV

4141

M&A Perspectives

Industrial Services

Also see July 19, 2014 Research Note: Engineering and Construction: M&A Perspectives

E&C Value Creation through M&A: Total Baird Coverage ($000s), 2010-2014

Note: Figure includes total combined value for the following tickers: ACM, CBI, JEC, PWR, MTZ, TTEK

Source: Company reports and Baird Research

$15,560

$9,047

$3,045

$27,651

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

12/31/2009EV

M&A Change in Value 12/31/2014EV

4242

M&A Perspectives

Industrial Services

Also see July 19, 2014 Research Note: Engineering and Construction: M&A Perspectives

E&C Value Creation through M&A: Total Baird Coverage ($000s), 2015-2017 YTD

Note: Figure includes total combined value for the following tickers: ACM, CBI, JEC, PWR, MTZ, TTEK

Source: Company reports and Baird Research

$1,776

$27,651

$5,829

$31,705

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

12/31/2014EV

M&A Change in Value 6/30/2017EV

4343

M&A Perspectives

Industrial Services

We believe M&A is one of the key reasons for E&C sector stock underperformance since 2010

Indexed Total Returns (E&C Index vs. S&P 500), since 12/31/09

Note: E&C Index (equal-weighted) comprised of: ACM, BKR (historical), BW, CBI, FLR, FWLT (historical), GVA, JEC, KBR, MDR, MYRG, PWR, SHAW (historical), TPC, TTEK, URS (historical)

Source: FactSet Research Systems; Baird Research

80

100

120

140

160

180

200

2010 2011 2012 2013 2014 2015 2016 2017

E&Cs S&P 500

Energycollapse

"TrumpBump"

Deflationunwind

andexecution

issues

2010-2014saw sector

performancemostlymatchS&P

Prices as of 9/22/17

4444

E&C Historical Large (>$100MM) M&A Transaction Details (2011-2017)

Date Enterprise Projected StrategicAnnounced Target Acquirer Value ($M) FTM TTM Heads Synergies Rationale12/21/2010 Aker Solutions (partial) Jacobs Engineering (JEC) $910 8.8x 4,500 End market and geographic diversification4/27/2011 Apptis Holdings URS Corporation (URS) $260 11.0x 1,000 End market diversification5/18/2011 MACTEC Amec plc (AMEC-LON) $280 5.9x 2,600 End market and geographic diversification7/25/2011 Environmental Resources Management Ltd. Charterhouse Capital Partners (PE) $950 12.5x 3,600 LBO and growth investment9/26/2011 Halcrow CH2M Hill ~$350 6.6x 1,100 Geographic diversification; scale leverage2/20/2012 Flint Energy Services (FES-TSE) URS Corp. (URS) $1,475 6.9x nm 10,000 $10-15M End market diversification6/7/2012 WSP (WSP-TSX) GENIVAR Inc. (GNV-TSX) $637 7.8x 5,500 End market and geographic diversification

7/30/2012 The Shaw Group (SHAW) CB&I (CBI) $2,000 5.0x 7.0x 25,000 ~$100M End market diversification; scale leverage12/28/2012 Kenny Construction Company Granite (GVA) $130 5.0x 425 End market and geographic diversification

1/3/2013 Parkland Pipeline Tetra Tech (TTEK) $140 7-8x 900 End market diversification1/3/2013 AEG Tetra Tech (TTEK) $95 5.5x 500 End market diversification1/7/2013 EnergySolutions, Inc. (ES) Energy Capital Partners (PE) $1,100 5.6x Additional financial capital

5/30/2013 Big Country Energy Services MasTec (MTZ) $127 1,200 Geographic diversification7/29/2013 Michael Baker Corp. (BKR) DC Capital Partners (PE) $397 11.4x 10.0x 3,109 LBO and growth investment9/8/2013 Sinclair Knight Merz Jacobs Engineering (JEC) $1,100 >9.5x 7.2x 6,500 End market and geographic diversification

1/13/2014 Foster Wheeler (FWLT) Amec plc (AMEC-LON) $3,300 9.0x 15.0x 13,000 $150M End market and geographic diversification3/12/2014 Focus Group Holdings WSP (WSP-TSX) $366 8.3x 1,700 End market and geographic diversification4/22/2014 Federal Network Systems (FNS) Jacobs Engineering (JEC) ~$100-120 750 End market diversification5/13/2014 MEGTEC Babcock & Wilcox (BWC) $155 9.0x 600 End market diversification; Technology6/23/2014 Kentz Corporation (KENZ-LON) SNC Lavalin (SNC-TSE) $1,970 8.8x 9.0x 14,500 $50M End market diversification6/30/2014 Pacer Construction MasTec (MTZ) $126 1,600 End market diversification7/7/2014 Conestoga-Rovers & Associates GHD N/A 3,000 Geographic diversification

7/13/2014 URS Corporation (URS) AECOM (ACM) $6,000 <7x 7.8x 50,000 $325M Service diversification, scale, cost synergies7/29/2014 Hunt Construction AECOM (ACM) $90 5.5x 700 Geographic diversification8/4/2014 Pike Electric (PIKE) Court Square Capital Partners (PE) $617 8.3x 8.9x 5,800 Financial investment; valuation arbitrage

8/21/2014 Callison ARCADIS (ARCAD-AMS) $120 4.8x 1,000 Service diversification; scale leverage9/3/2014 Parsons Brinckerhoff (segment of BBY-LON) WSP (WSP-TSX) $1,243 8.8x 13,000 $25M Geographic diversification; scale leverage

9/15/2014 Hyder Consulting PLC (HYC-LON) ARCADIS (ARCAD-AMS) $500 7.7x 12.6x 4,500 Geographic diversification9/24/2014 Dessau Stantec (STN) $116 1,300 Geographic diversification

10/20/2014 WesTower Communications MasTec (MTZ) $199 7.1x 2,000 Customer diversification5/28/2015 CH2M Hill (partial investment) Apollo Global Management $300* 7.0x 8.0x 26,000 Financial investment; liquidity8/25/2015 MMM Group Limited WSP (WSP-TSX) $425 8.9x 2,000 End market diversification10/5/2015 Willbros Professional Services TRC Companies (TRR) $130 850 Service diversification12/7/2015 Stork Holdings Fluor Corporation (FLR) $755 ~6.0x 6.9x 15,000 Service diversification1/18/2016 Coffey International Tetra Tech (TTEK) $125 7.3x 3,300 $10M Geographic and customer diversification3/29/2016 MWH Global Stantec (STN) $795 9.5x 6,800 $25M End market and geographic diversification5/23/2016 Wyle KBR (KBR) $570 8.5x 3,500 $5M End market expansion - Federal6/2/2016 Goodman Networks Inc. Dycom (DY) $108 4.3x End market/geographic expansion8/12/2016 Honeywell Technology Solutions (HTSI) KBR (KBR) $266 6.3x 3,550 End market expansion - Federal3/13/2017 Amec Foster Wheeler (AMFW) John Wood Group PLC (WG-LON) $3,951 10.3x 9.3x 36,000 $183 End market/geographic expansion3/31/2017 TRC Companies, Inc. (TRR) New Mountain Capital (PE) $615 10.2x 11.5x 4,100 Financial Investment4/20/2017 WS Atkins (ATK-LON) SNC Lavalin (SNC-TSE) $3,108 8.7x 9.8x 18,000 $89 Service and geographic expansion5/4/2017 SEFNCO Communications MasTec $80 8.0x Service and geographic expansion

7/24/2017 Stronghold Quanta Services $450 8.0x 2,800 Service expansion8/2/2017 ch2m Jacobs Engineering (JEC) $3,270 10.1x 20,000 $150M Service expansion

8/14/2017 Opus International Consultants (OIC-NZ) WSP (WSP-TSX) $219 10.7x 3,000 Geographic expansion (New Zeland)

Note: Private equity transactions denoted in red font; *CH2M represents a partial (15%, growing to 20%) equity investment, included for perspectiveSource: Company reports and Baird research estimates

Implied EBITDA Multiple

Large E&C M&A: 2017 Activity Has Increased

4545

Publicly Listed E&Cs

4646

Where We’ve Been

Industrial Services

Years of heavy restructuring have dramatically reduced heads across the sector in the past 3-4 years

2015 E&C Restructuring Programs Summary (abridged)

Source: Company Reports and Presentations; Baird Research

-Moving to a leaner cost structure, focusing on opex and more consulting-focused work-Focusing on 9 "unstoppable macro trends" and launching five new strategic initiatives-Previous restructuring actions focused on headcount/real estate reduction

-Broader asset restructuring; Targeting $100-200M in annnualized cost savings-No longer pursuing Power EPC and Transportation design-build projects-Driving productivity and aggressively pursuing claims; new PE sponsorship

-Rebranding and re-aligning business, not a formal corporate restructuring program-Engaged in turnaround efforts in NA, improving go-to-market strategy-Continue to realize synergies from Callison and Hyder acquisitions

Amec Foster Wheeler(AMFW)

Technip SA(TEC-PAR)

Saipem(SPM-MIL)

Cardno Group(CDD-ASX)

Worley Parsons(WOP-ASX)

Tetra Tech(TTEK)

KBR(KBR)

Mistras Group(MG)

McDermott(MDR)

SNC Lavalin(SNC-TSE)

Jacobs Engineering(JEC)

-Improved organizational structure focused on vertical with improved accountability-Broader strategic review underway: Greater emphasis on capital allocation/ROIC/margins-$150-180M annual cost savings expected (30% identified), costing $205-230M

-Exit from construction-focused RCM business ($61M remaining in segment backlog)-Mission clarity around core engineering/consulting services, focused on water/environmental-Broader capital allocation review, now focused on total shareholder return (dividend/buyback)

Company Details of Announced Restructuring Program

-$325M in cost savings by F2017 (exit F2016 at $275M), incurring $200M in costs-Focused on back-office, real-estate consolidation and incremental O&G headcount reduction

AECOM(ACM)

Fluor Corp.(FLR)

-No "formal" restructuring program, "stealth" restructuring for several years-Transition from EPCM to integrated solutions company-Fabrication JV/Storch Group acquisition strategic steps to diversify/capture wallet share

-Broader reorganizational effort to address a more integrated project delivery model-Utilizing central engineering centers to significantly reduce customer overlap-Targeting $180M in cost savings by 2017, heacount reductions (20% in Canada O&G)

CH2M Hill(private)

Arcadis(ARCAD-AMS)

-Recapitalization effort; Identified A$20M annual cost savings-Divest non-core businesses, particularly in US (benefits of A$50-90M)-Focus on core geographies/services/clients (10/10/10 initiative)

-Exiting non-strategic businesses and reducing business units from 16 to 5 -Focusing on global hydrocarbons and government services markets-$200M in annual cost savings expected by 2016, with more than $150M already identifed

-International restructuring efforts (Japan/France/UK), first in company history-Broader organizational accountability and focus on gross margin/cash collection-Potential for ~100-200 bps of margin expansion from internal actions

-New management, exiting problem contracts, repositioning market focus-Reducing cost base by ~$150M by 2016. -Changing operating model and reporting structure

-Launched "STEP change" program in October (efficiency improvement program)-Aim to deliver annaulized EBITDA of 7% in 2017 (from 6% today)-Expects ~$90M in after-tax charges in 2015; CEO turnover

-€650M restructuring program (€585M taken so far); €830M in cost savings identified-Business Reduction (Belgium/Myanmar); Deep Constructor vessel removed from Group fleet-Look to cut headcount by 6,000; capex & SGA reductions

-€1.5B cost cutting target; EBIT margin expected to rise 200 bps by 2019-Raising €3.5B in additional capital (rights offering)-Changing business mix to focus on higher value-added/lower-risk activities

4747

E&C Employment: A Macro Look

Industrial Services

Baird E&C Employment Index (rate of change)

Source: Bureau of Labor Statistics and Baird Research

Note: The Baird E&C Employment Index consists of the following NAICS employment categories: Engineering and drafting services (541330/541340)andHeavy and Civil Engineering Construction (237)

(30)

(25)

(20)

(15)

(10)

(5)

-

5

10

15

20

-12.0%

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

Jan-

91D

ec-9

1N

ov-9

2O

ct-9

3S

ep-9

4A

ug-9

5Ju

l-96

Jun-

97M

ay-9

8A

pr-9

9M

ar-0

0Fe

b-01

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02D

ec-0

2N

ov-0

3O

ct-0

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ay-0

9A

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0M

ar-1

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b-12

Jan-

13D

ec-1

3N

ov-1

4O

ct-1

5S

ep-1

6

Baird E&C Monthly Employment Gains, 3-Month MA (000s), right

Baird E&C Employment Index 3-Month MA YOY Growth, left

Previous very strong gains,

weaker in April

Baird E&C Employment Index (000s)

Source: Bureau of Labor Statistics and Baird Research

Note: The Baird E&C Employment Index consists of the following NAICS employment categories: Engineering and drafting services (541330/541340)andHeavy and Civil Engineering Construction (237)

1,200

1,300

1,400

1,500

1,600

1,700

1,800

1,900

2,000

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Absolute E&C employmentlevels have recently

rebounded, now at theirhighest level since 2008.

April 2017 saw slight decline, however. May BLS data unclear.

4848

Today’s Hot Topics With Investors

• Problem contracts and focus on managing risk

• Cash flow getting more emphasis today that in past 10 years

• Trump bump – is it dead?

• Deregulation and streamlined permitting

• Skepticism toward M&A

• Inflection to organic growth

• Gross margins embedded in backlog, not revenue backlog

• “Second wave” of petchem and LNG Export

Industrial Services

4949

2017 Estimates Impacted by Charges, 2018 by Backlog Weakness

Prices as of 9/22/17

E&C Coverage: Consensus EPS Estimate Revisions vs. Stock Perfomance

F2017 Estimate Revisions

Stock ReturnTicker 12/31/2016 3/31/2017 6/30/2017 9/22/2017 Since 12/31/16 Since 3/31/17 Since 6/30/17 (YTD)ACM 2.94 2.94 2.97 2.93 0% 0% -1% -4%BW 1.39 0.90 0.77 -2.56 -285% -384% -434% -79%CBI 4.65 4.26 2.77 -1.82 -139% -143% -166% -49%FLR 3.05 2.91 2.45 1.49 -51% -49% -39% -22%GVA 2.48 2.22 1.83 1.48 -41% -33% -19% 5%JEC 3.15 3.09 3.12 3.08 -2% 0% -1% 1%KBR 1.34 1.26 1.32 1.41 5% 12% 7% 7%MTZ 2.08 2.36 2.45 2.74 32% 16% 12% 19%MYRG 1.62 1.70 1.37 0.93 -42% -45% -32% -29%PWR 2.03 1.99 1.97 1.67 -18% -16% -16% 6%TPC 2.41 2.28 2.29 2.25 -6% -1% -1% -2%TTEK 2.16 2.15 2.16 2.11 -2% -2% -3% 1%

-46% -54% -58% -12%

F2018 Estimate Revisions

YTDTicker 12/31/2016 3/31/2017 6/30/2017 9/22/2017 Since 12/31/16 Since 3/31/17 Since 6/30/17 ReturnACM 3.22 3.19 3.02 2.88 -11% -10% -5% -4%BW 1.53 1.10 1.00 0.38 -75% -65% -62% -79%CBI 4.62 4.56 4.40 2.10 -55% -54% -52% -49%FLR 3.19 3.24 2.94 2.58 -19% -20% -12% -22%GVA 3.45 3.16 3.05 2.91 -16% -8% -5% 5%JEC 3.51 3.45 3.45 3.41 -3% -1% -1% 1%KBR 1.37 1.38 1.36 1.33 -3% -4% -2% 7%MTZ 2.37 2.55 2.68 2.98 26% 17% 11% 19%MYRG 1.90 1.92 1.73 1.58 -17% -18% -9% -29%PWR 2.02 2.31 2.32 2.20 9% -4% -5% 6%TPC 2.51 2.82 2.86 2.84 13% 1% -1% -2%TTEK 2.43 2.52 2.57 2.36 -3% -6% -8% 1%

-13% -14% -13% -12%

Source: Factset; Baird Research

Street Consensus (First Call) Estimate (as of) EPS revisions

EPS revisionsStreet Consensus (First Call) Estimate (as of)

5050

E&C Stocks Have Underperformed YTD, Recently Better

Prices as of 9/22/17

E&C Sector Stock Performance

Note: E&C Index refers to the sample average of the firm's considered in the chartSource: FactSet and Baird Research

Three-Month Percentage Price Change Trailing 12 Months Percentage Price Change

One-Month Percentage Price Change YTD Percentage Price Change

2%7%

9%9%

11%15%15%16%17%

19%20%20%

48%

0% 10% 20% 30% 40% 50% 60%

S&P 500PWRFLR

TTEKJEC

ACMMTZ

E&C IndexMYRG

MDRMG

KBRCBI

-11%-7%

-4%-2%

-1%2%

4%7%

8%10%

17%17%

18%

-15% -10% -5% 0% 5% 10% 15% 20%

MYRGFLR

TTEKMDR

MGS&P 500

MTZE&C Index

JECACMCBI

PWRKBR

-49%-27%

-22%-19%

-7%-6%

-2%0%2%

6%7%

12%20%

-60% -50% -40% -30% -20% -10% 0% 10% 20% 30%

CBIMYRG

FLRMG

E&C IndexMDRACMJEC

TTEKPWRKBR

S&P 500MTZ

-40%-19%

-16%-8%

12%14%15%

20%21%

24%42%

45%60%

-60% -40% -20% 0% 20% 40% 60% 80%

CBIFLRMG

MYRGJEC

E&C IndexS&P 500

KBRTTEKACMPWRMDRMTZ

5151

U.S. and Select International E&C Industry Valuation

Company Ticker Price MktCap ($M) FTM AVG FTM AVGWSP Global WSP-TSE $52.19 $5,363 11.3x 8.5x 17.5x 14.8xTetra Tech TTEK $43.80 $2,454 10.9x 8.8x 19.2x 16.2xAECOM ACM $35.55 $5,475 10.8x 8.4x 14.8x 11.4xStantec Inc. STN-TSE $34.64 $3,943 10.6x 8.8x 15.7x 14.5xKBR Inc. KBR $17.81 $2,495 8.2x 5.4x 13.0x 13.8xJacobs Engineering JEC $57.17 $6,907 8.0x 8.8x 16.4x 15.7xChicago Bridge & Iron CBI $16.22 $1,645 8.0x 6.8x 8.3x 9.9xFluor Corp. FLR $40.75 $5,750 8.0x 7.3x 18.6x 15.1x

Average: 9.5x 7.8x 15.4x 13.9x

FY1 Avg.S&P 500: 17.7x 14.8x

S&P 500, Industials: 18.1x 14.3xAs of 09/22/2017; AVG = 10-year average or security trading history, if shorter than 10 years; STN/WSP currency is in CADSource: FactSet Research Systems and Baird estimates

U.S. Specialty Contractors Valuation

Company Ticker Price MktCap ($M) FTM AVG FTM AVGWilbros Group WG $2.98 $190 na 5.8x na NAMastec Corp. MTZ $45.70 $3,782 9.0x 7.6x 19.8x 13.4xQuanta Services PWR $37.02 $5,603 8.8x 9.2x 17.3x 19.8xDycom Inc. DY $82.87 $2,553 7.8x 6.2x 18.1x 19.2xMYR Group MYRG $27.37 $441 5.9x 6.5x 16.1x 17.7x

Average: 7.9x 7.0x 17.8x 17.5x

As of 09/22/2017; AVG = 10-year average or security trading history, if shorter than 10 yearsSource: FactSet Research Systems and Baird estimates

EV/EBITDA, ftm P/E, ftm

EV/EBITDA, ftm P/E, ftm

Sector Valuation – Valuation Near Historical Cycle Average

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Appendix – Important Disclosures and Analyst Certification

Industrial Services

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Industrial Services

Appendix – Important Disclosures and Analyst Certification

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Industrial Services

Appendix – Important Disclosures and Analyst Certification