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Industrial and Construction Services News

Five-Year Forecast for Equipment Rental Revenue Strengthens

American Rental Association (ARA) ups growth predictions for coming years regarding equipment rental industry revenues, growing at an average annual rate of 4.3% to 2020. This growth is driven by strong residential and nonresidential construction, as well as consumer spending. However, it is unclear what effect infrastructure spending will have on rental revenues as questions loom about differing potential levels of infrastructure spending. 

"Five-Year Forecast for Equipment Rental Revenue Strengthens" - Business Wire

 
FMI Construction Forecast: What’s In Store For 2017

Respondents to surveys indicate that construction executives believe nonresidential construction is stronger than the economy as whole, but the overall score for the nonresidential construction index (NCRI) dropped 2.7 points from Q3 2016 to Q4 2016. Despite this drop in the index and potential slowed growth in nonresidential construction, the NCRI remains solidly positive and has been since Q1 2012.

"FMI Construction Forecast: What's In Store For 2017" - Phil Warner, Trenchless Technology

 
Contractors, Equipment Distributors Upbeat Over Construction Outlook

Wells Fargo reports increased optimism for nonresidential construction activity in their most recent forecast, fueled at least partially by upticks in infrastructure spending. Through it’s “optimism quotient” (OQ), Wells recorded its third highest reading in the last 20 years. The reading indicates  “the industry [should] continue to build on the momentum generated over the last few years.” 84% of industry executives surveyed expected “moderate to significant expansion of [the construction] industry over the next two years.”

"Contractors, Equioment Distributors Upbeat Over Construction Outlook" - Jann Swanson, Mortgage News Daily

 

Industrial and Construction Services Transactions

 
January 2017 – PSC Industrial Outsourcing acquires Seal Industries, Inc.

PSC Industrial Outsourcing, a leading national provider of cleaning and environmentally sensitive services for energy infrastructure based in Houston, has acquired Seal Industries, a forerunner for providing LDAR (leak detection and repair) and other related services based in Deer Park, TX.

 
February 2017 – Apache Industrial Services is acquired by Quantum Capital and simultaneously merges with Skyway Canada

Apache Industrial Services, a provider of scaffolding, insulation, and other industrial services, merged with Skyway Canada, a scaffolding service provider in Ontario, while also simultaneously being acquired by Quantum Capital, a private equity firm.

 
March 2017 – Safway Group announces merger with Brand Energy Infrastructure & Industrial Services Inc.

Safway Group, an industrial scaffolding and services company based in Wisconsin announced a merger with Georgia-based energy and industrial services firm Brand Energy & Infrastructure Services Inc. For more info, look at TKO Miller’s blog post on the deal.

 

TKO Miller Market Analysis

  • Nonresidential construction continues riding momentum from growth in prior years and, despite showing signs of slowing, is still strong compared to the overall economy
  • As construction in the industrial, nonresidential, and infrastructure-related sectors grows (or is expected to grow) scaffolding and other industrial services will experience increased revenue. The extent to which President Trump follows through on his promise of infrastructure spending will be directly related to increases in this sector as they relate to revenues bumps for infrastructure service providers
  • TKO Miller has seen Trump’s claims pique the interest of private equity buyers for construction related services and equipment companies
  • Prolonged low oil and gas prices have leaned out the industry allowing many firms to continue and even expand spending with crude’s somewhat stabilized prices in the $45-60 dollar range, increasing the demand for industrial services within the oil and gas sector
  • Industrial cleaning and maintenance sector revenues are expected to see a slight bump in revenues in the years till 2021, compared with the previous years to 2016

 

Middle Market Valuation Multiples

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Industrial and Construction Services Valuation Index

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