Bank of America Investment Banking Pitch Book
Valuation Supporting Details
Weighted Average Cost of Capital Analysis
Barra Betas of Selected Companies
Selected Companies
Quanta Services
Encor
Mas Tec
Dycom
Aegion
MYR Group
Willbros Group
Average
Pioneer
WACC Sensitivity
23
Net Debt /
EBITDA
(4)
5
(6)
3.0
Net Debt!
Eq. Val.
0.0%
21.3%
43.0%
84.7%
Levered
1.28
1.28
1.37
1.35
1.32
(1)
1.79
1.38
1.41
Net Debt/
Net Cap.
12.7%
25.7%
38.7%
Beta
Unlevered
1.28
1.18
1.08
1.13
5.00%
5.50%
6.00%
6.50%
1.24
1.42
1.23
0.98
Est. Cost
of Debt (5)
Equity
Mkt. Cap
$7,649
3,075
3,212
1,104
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5:30
583
$2,443
324
0.85
7.37%
7.31%
7.20%
7.02%
Net
Debt/(Cash)
($478)
(72)
709
400
248
$152
218
Net Debt /
Net Cap
8.03%
7.97%
7.82%
7.58%
(6.7%)
(2.4%)
19.9%
27.1%
(16.8%)
28.6%
10.1%
40.2%
Geometric Mean ERP
0.98
1.12
8.69%
8.62%
8.44%
8.15%
Calculating WACC
Cost of Equity
Risk Free Rate (3)
Unlevered Beta (2)
Levered Beta (4)
Historical Risk Premium
Cost of Equity
Pre-tax Cost of Debt
After-Tax Cost of Debt (5)
Target Net Debt/Total Net Cap.
WACC
1.25
9.36%
9.27%
9.06%
8.71%
Nota: Dolors in millions.
Source: Public company filings, Barra, and lobotson 2014.
(1) For each salacted company, represents Bata as sourced from Borra.
(3)
Unlevered Beta = Lavared Bato/1 + ((1-Tax Rate) *Net Dabt/Equity)). Univared Bato Lavarad Bato for company's with anat cosh position.
Twenty Year U.S. Government Bond Vield as of April 23, 2014.
(3)
Represents levaring of the Unlevered Beto with Lavered Bato (Uniavared Bato)*(1+(1-Tax Rate)(Net Debt/Equity)). Lavarad Bato = Unlavarad Bata at a hypothetical capital structure with no debt.
After-tax cost of cact at 40% tax rata.
Represents range of cost of deat for an ilustrative WACC range.
0.85
9.10%
9.01%
8.81%
8.49%
ERP Average
Geometric
3.20%
1.11
8.65%
5.50%
3.30%
12.7%
7.97%
Arithmetic Mean ERP
0.98
10.03%
9.94%
9.69%
9.29%
Bank of America
Merrill Lynch
Arithmetic
1.12
10.97%
10.86%
10.57%
10.09%
3.20%
1.11
10.91%
5.50%
12.7%
9.94%
1.25
11.91%
11.79%
11.44%
10.88%View entire presentation