Commercial & Industrial Services - SECTOR UPDATE August 2021 - Harris Williams
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Commercial & Industrial Services SECTOR UPDATE │ August 2021
What We’re Reading
COMMERCIAL & INDUSTRIAL SERVICES INDUSTRY NEWS & TRENDS
In this Industry Update, we have included a collection of articles focused on economic factors and trends that are impacting the
commercial and industrial services industry: labor shortage and the impact of return-to-office dynamics on facility services.
Despite some of the uncertainty around the economic environment and return-to-office dynamics, Harris Williams believes that
commercial and industrial service companies that provide a unique service proposition to their customers will continue to thrive
and capture market share, especially if they can attract talent and provide services to commercial buildings to ensure a safe
and clean return to the office.
LABOR SHORTAGE
Tight Labor Market Returns the Upper Hand to American Workers | Wall Street Journal
“Ballooning job openings in fields requiring minimal education—including in restaurants, transportation, warehousing and manufacturing—
combined with a shrinking labor force are giving low-wage workers perks previously reserved for white-collar employees. That often means
bonuses, bigger raises and competing offers.”
Read the full article here.
Job Openings Are at Record Highs. Why Aren’t Unemployed Americans Filling Them? | Wall Street Journal
“As the economy reopens, the process of matching laid-off workers to jobs is proving to be slow and complicated, a contrast to the swift and
decisive layoffs that followed the initial stage of the pandemic in early 2020.”
Read the full article here.
Attracting Talent During a Worker Shortage | Harvard Business Review
“The Institute for Supply Management’s (ISM) spring survey said expectations for the remainder of 2021 have strengthened somewhat
compared to December as there is hope that the corner has been turned on the COVID-19 pandemic. As a result, both manufacturing and
services sectors are primed for expansion the rest of the year.”
Read the full article here.
RETURN-TO-OFFICE DYNAMICS
How the Pandemic Is Changing Office Space | IFMA
“The pandemic has taught us a lot about how our modern office spaces do and don't meet our needs. New offices will have to entice
employees with the comforts of home, balance sustainability with good ventilation and flexible indoor/outdoor spaces and understand
where to incorporate easy-to-sanitize materials and touchless fixtures.”
Read the full article here.
Five Types of Commercial Cleaning for Workplaces to Consider Post-Covid-19 | Forbes
“One thing many companies expect to see is an increased focus on sanitation. After more than a year of navigating a highly contagious virus,
many customers expect businesses to maintain stringent cleaning and sanitation protocols. In fact, it’s likely a condition of patronage for
many of them. To meet this expectation, about half of small businesses plan to ramp up their cleaning or disinfection efforts in the coming
year.”
Read the full article here.
2
Public Markets1
HISTORICAL STOCK PRICES – LAST 5 YEARS
175%
150%
125%
100%
75%
50%
25%
0%
(25%)
(50%)
Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21
HISTORICAL MEDIAN TEV/LTM EBITDA MULTIPLES – LAST 5 YEARS
24x
22x
20x
18x
16x
14x
12x
10x
8x
6x
4x
Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21
Environmental Services Safety & Security
Facility Services Testing, Inspection, Certification & Compliance
Property Management Waste Management
S&P 500 Index
Notes: Sub-sector indices weighted by stock price. Comparable company sets listed on page 9.
1. S&P Capital IQ, as of 7.26.2021 3
Public Markets1
12-MONTH % CHANGE IN STOCK PRICE MEDIAN TEV / 2021E EBITDA MULTIPLE
Property Management 103.3% Property Management 12.8x
Facility & Field Services 33.7% Facility & Field Services 13.3x
Environmental Services 45.4% Environmental Services 9.9x
Safety & Security 22.3% Safety & Security 7.4x
Waste Management 31.0% Waste Management 17.3x
Testing, Inspection, Certification &… 37.2% Testing, Inspection, Certification &… 15.1x
S&P 500 37.2% S&P 500 14.9x
MEDIAN 3-YEAR REVENUE CAGR (2018 – 2021) MEDIAN LTM REVENUE GROWTH
Property Management 13.2% Property Management -3.1%
Facility & Field Services 6.7% Facility & Field Services -8.4%
Environmental Services 6.5% Environmental Services -6.2%
Safety & Security 5.2% Safety & Security
-13.0%
Waste Management 7.0% Waste Management 0.3%
Testing, Inspection, Certification &… 5.2% Testing, Inspection, Certification &… -5.0%
S&P 500 3.2% S&P 500 3.9%
MEDIAN EBITDA MARGIN (2018 – 2021) MEDIAN LTM EBITDA MARGIN
Property Management 9.6% Property Management 10.1%
Facility & Field Services 8.1% Facility & Field Services 7.3%
Environmental Services 13.9% Environmental Services 13.9%
Safety & Security 8.9% Safety & Security 6.3%
Waste Management 28.2% Waste Management 29.2%
Testing, Inspection, Certification &… 18.7% Testing, Inspection, Certification &… 21.0%
S&P 500 23.1% S&P 500 25.5%
NET DEBT / LTM EBITDA
Property Management 2.0x
Facility & Field Services 1.3x
Environmental Services 3.6x
Safety & Security 3.7x
Waste Management 2.9x
Testing, Inspection, Certification &… 2.2x
S&P 500 1.7x
1. S&P Capital IQ, as of 7.26.2021 4Economic Trends
CONSUMER CONFIDENCE AND UNEMPLOYMENT
U.S. GDP GROWTH2
R A T E 3,4
(In billions indexed to 2012 USD)
Unemployment Rate
Consumer Confidence
Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21
Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19 Jun-20 Jun-21
GDP Value Annual Percentage Growth
Consumer Confidence Unemployment Rate
NON-FARM PAYROLLS (1-MONTH NET CHANGE)4 U.S. INITIAL JOBLESS CLAIMS5
(Payrolls in 000s) June-21: June-21:
850(P) 368,000
9,000 7,000,000
4,000 6,000,000
5,000,000
(1,000)
4,000,000
(6,000)
3,000,000
(11,000)
2,000,000
(16,000) 1,000,000
(21,000) 0
Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19 Jun-20 Jun-21 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19 Jun-20 Jun-21
PMI INDEX6 ISM NON-MANUFACTURING INDEX7
June-21:
62 60.1
70
56 60
50
50
40
44 30
20
38
10
32 0
June-13 Jun-15 Jun-17 Jun-19 Jun-21 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19 Jun-20 Jun-21
Note: A PMI Index figure greater than 50 indicates expansion.
2. U.S. Bureau of Economic Analysis 5. U.S. Department of Labor
5
3. The Conference Board 6. U.S. Census
4. U.S. Bureau of Labor Statistics 7. Institute for Supply ManagementM&A Market Trends1
COMMERCIAL & INDUSTRIAL SERVICES M&A VOLUME BY YEAR
500
459 456
450 434 423 423
410 420 413
398 407 406
392 394 393 389
400 378 379
356 364
343
350
309
Number of Deals
300
250
199
200
150
100
50
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2016 2017 2018 2019 2020 2021
Note: Data through July 26, 2021.
REPRESENTATIVE COMMERCIAL & INDUSTRIAL SERVICES TRANSACTIONS
Date Target Business Description Sector Acquirer(s)
Leading provider of comprehensive fire protection solutions across the
7/20/21 Rapid Fire Protection Group Fire & Life Safety Pye Barker (Altas)
western United States
Provides federally mandated services to help make spaces safe from
7/20/21 EIS Holdings Environmental Sun Capital Partners
environmental and structural hazards
Provider of HVAC and plumbing installation, replacement, and preventive Therma Holdings
7/16/21 CMTA Mechanical Services
maintenance services for commercial clients (Blackstone)
7/12/21 Polygon Provider of damage restoration services in Sweden Property Restoration AEA Investors
3Phase Elevator
6/29/21 West Virginia Elevator An elevator company based out of West Virginia Mechanical Services
(Berkshire)
Gunnison (Warren
6/23/21 Pittman's Tree and Landscaping Landscaping services company based out of Front Royal, Virginia Landscaping
Equity)
Jensen Hughes
6/14/21 Fire Engineered Solutions Ghent Provider of safety consultancy services based in Ghent, Belgium Fire & Life Safety
(Gryphon)
6/9/21 Gil-Bar Industries A leading provider of HVAC solutions and services in the United States Facility Services ICG
Distributor of air conditioning, refrigeration, and roof support in
6/7/21 ACR Supplies Mechanical Services DiversiTech
Nottingham, United Kingdom
National Fire & Safety
5/26/21 Texas Fire & Safety A fire and life safety company based out of Texas Fire & Life Safety
(Highview Capital)
1. S&P Capital IQ, as of 7.26.2021 6Commercial & Industrial Practice Overview
GLOBAL M&A ADVISOR
10 INDUSTRY GROUPS 3 DECADES 1 UNIFIED TEAM
With Robust Experience Providing Award-Winning Bringing Firmwide Dedication
Across the Globe M&A Advisory Services to Every Engagement
COMMERCIAL & INDUSTRIAL SELECT RECENT COMMERCIAL &
FOCUS SECTORS INDUSTRIAL TRANSACTIONS
› Environmental & Waste › Mechanical Services
› Events & Entertainment › Property Management
› Facility Services › Property Restoration
› Field & Route Based Services › Security
› Fire & Life Safety › Service Aggregators
› Food Services › Technician Services
› Janitorial › Testing, Inspection,
› Landscaping Certification & Compliance
GET IN TOUCH
Bob Baltimore | Managing Director Derek Lewis | Managing Director
(804) 915-1129 (804) 915-1118
bbaltimore@harriswilliams.com dlewis@harriswilliams.com
Brian Lucas | Managing Director Taylor Morris | Director
(804) 932-1323 (804) 887-6074
blucas@harriswilliams.com tmorris@harriswilliams.com
7Our Firm
Harris Williams has a broad range of industry expertise, which creates powerful opportunities. Our clients benefit from
our deep-sector experience, integrated industry intelligence and collaboration across the firm, and our commitment to
learning what makes them unique. For more information, visit our website at www.harriswilliams.com/industries.
INDUSTRY GROUP EXPERTISE
Aerospace, Defense & Business Energy, Power Specialty Transportation
Government Services Services & Infrastructure Distribution & Logistics
Building Products Healthcare
Consumer Industrials Technology
& Materials & Life Sciences
CONSISTENT RECOGNITION FOR QUALITY
HARRIS WILLIAMS OFFICE LOCATIONS
UNITED STATES EUROPE
BOSTON RICHMOND FRANKFURT
One International Place (HEADQUARTERS) Bockenheimer Landstrasse 33-35
Suite 2620 1001 Haxall Point 60325 Frankfurt
Boston, Massachusetts 02110 9th Floor Germany
Phone: +1 (617) 482-7501 Richmond, Virginia 23219 Phone: +49 069 3650638 00
Phone: +1 (804) 648-0072
CLEVELAND LONDON
1900 East 9th Street SAN FRANCISCO 25 Savile Row
20th Floor One Market Plaza, Steuart Tower 4th Floor
Cleveland, Ohio 44114 11th Floor London W1S 2ER, England
Phone: +1 (216) 689-2400 San Francisco, California 94105 Phone: +44 (0) 20 7518 8900
Phone: +1 (415) 288-4260
MINNEAPOLIS
222 South 9th Street WASHINGTON, D.C.
Suite 3350 800 17th St. NW
Minneapolis, Minnesota 55402 2nd Floor
Phone: +1 (612) 359-2700 Washington, D.C. 20006
Phone: +1 202-207-2300
8Harris Williams
SOURCES
1. S&P Global Capital IQ 5. U.S. Department of Labor
2. U.S. Bureau of Economic Analysis 6. US Census
3. The Conference Board 7. Institute for Supply Management
4. U.S. Bureau of Labor Statistics
Public Comparable Companies:
Facility & Field Services: ABM Industries, Aramark, Cintas Corporation, Compass Group, ISS, Mitie Group, Sodexo, EMCOR Group, UniFirst Corporation,
Rentokil Initial, ServiceMaster Global, Stericycle
Environmental Services: Clean Harbors, US Ecology, Heritage-Crystal Clean, Veolia Environment, Ecolab, Suez
Property Management: Jones Lang LaSalle, CBRE Group, FirstService
Safety & Security: G4S, Prosegur, Securitas
Waste Management: Advanced Disposal Services, Casella Waste Systems, Republic Services, Waste Connections, Waste Management
Testing, Inspection & Certification: ALS Limited, Bureau Veritas, Eurofins Scientific, Intertek Group, SGS
DISCLOSURES AND DISCLAIMERS
Investment banking services are provided by Harris Williams LLC (“Harris Williams”). Harris Williams is a registered broker-dealer and member of FINRA and
SIPC. Harris Williams & Co. Ltd is a private limited company incorporated under English law with its registered office at 8th Floor, 20 Farringdon Street, London
EC4A 4AB, UK, registered with the Registrar of Companies for England and Wales, registration number 07078852. Harris Williams & Co. Ltd is authorized and
regulated by the Financial Conduct Authority. Harris Williams & Co. Corporate Finance Advisors GmbH is registered in the commercial register of the local court
of Frankfurt am Main, Germany, under HRB 107540. The registered address is Bockenheimer Landstrasse 33-35, 60325 Frankfurt am Main, Germany (email
address: hwgermany@harriswilliams.com). Geschäftsführers/Directors: Jeffery H. Perkins, Paul Poggi, VAT No. DE321666994. Harris Williams is a trade name
under which Harris Williams LLC, Harris Williams & Co. Ltd and Harris Williams & Co. Corporate Finance Advisors GmbH conduct business.
The information and views contained in this content have been prepared in part by Harris Williams. This content does not purport to be comprehensive or to
contain all the information that a recipient may need in order to evaluate any investment or potential transaction. This content is not a research report, as such
term is defined by applicable law and regulations, and is provided for informational purposes only. Any and all information, including estimates, projections and
other forward-looking statements, presented in this document may involve various assumptions and significant elements of subjective judgment and analysis
that may or may not be correct. Harris Williams has not independently verified, and neither Harris Williams nor any other person will independently verify, any
of the information, estimates, projections or forward-looking statements contained herein or the assumptions on which they are based. The information
contained in this document is made as of the date hereof unless stated otherwise. Harris Williams does not expect to update or otherwise revise this document
nor provide any additional information, nor correct any inaccuracies herein which may become apparent.
This content is intended for institutional use only and should not be relied upon by retail investors or members of the general public. The information contained
herein is believed by Harris Williams to be reliable but Harris Williams makes no representation or warranty as to the accuracy or completeness of such
information, and information contained herein that is based on material prepared by others may involve significant elements of subjective judgment and
analysis which may or may not be correct. Opinions, estimates and projections contained herein constitute Harris Williams’ judgment and are subject to change
without notice.
This content is not to be construed as investment advice an offer to buy or sell or a solicitation of an offer to buy or sell any financial instruments or to
participate in any particular transaction, nor shall this content form the basis of any contract. It does not constitute and should not be construed as an
endorsement or recommendation of any entities’ products or services.
No part of this material may be copied or duplicated in any form or by any means, or redistributed, without Harris Williams’ prior written consent.
9You can also read
