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A Wall Street Transcript Interview with Tahira Afzal, an Equity Research Analyst Covering Construction, Engineering and Infrastructure with KeyBanc Capital Markets Inc.: Domestic Shale Infrastructure Driving Demand for Construction Stocks

67 WALL STREET, New York - April 16, 2014 - The Wall Street Transcript has just published its Building Materials, Residential Construction and Housing Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Construction Equipment Replacement Trends - Growth in Equipment Leasing Adoption Rates - Infrastructure Build in Emerging Markets - Energy Infrastructure Companies - Infrastructure Spending - Production Rates in Capital Goods - Opportunities in Domestic Shale Infrastructure - Increased Rental Demand

Companies include: Chicago Bridge & Iron Company (CBI), Fluor Corporation (FLR), KBR, Inc. (KBR), Jacobs Engineering Group, Inc. (JEC), Quanta Services Inc. (PWR), MasTec, Inc. (MTZ), Primoris Services Corporation (PRIM), Willbros Group Inc. (WG), Matrix Service Co. (MTRX), EMCOR Group Inc. (EME), Comfort Systems USA Inc. (FIX)

In the following excerpt from the Building Materials, Residential Construction and Housing Report, an expert analyst discusses the outlook for the sector for investors:

TWST: Your coverage is, broadly considered, construction, engineering and infrastructure. Is that right?

Ms. Afzal: That's correct.

TWST: For those companies, is the primary driver of their success the overall economy or, if not, what are the issues that impact their success?

Ms. Afzal: GDP growth is definitely the big driver for these companies. And if you look at the world in two buckets, one is really the developing world, and over there you have a lot of large capex projects. That is where a lot of the incremental demand is coming for resources and for infrastructure. A lot of the projects over there really are driven by economic growth. Right now, in the BRIC countries, China, etc., the demand is tepid.

The demand outside of the U.S., if you really look at it from an economic perspective, has not been very conducive to infrastructure buildout. As in the U.S. in general and in mature markets in general, the infrastructure numbers have really been about replacement of aging infrastructure. That has been a little driver for the space.

What the contracting community is really excited about is the developments around the oil and gas shales recently. That can be regarded as sort of new technology, and it's a technology that's obviously led to a massive change in economics for a whole host of projects. It is outside of the typical aging infrastructure driver for the mature markets. As new infrastructure coming in, we are also seeing a move for our greenfield infrastructure, which is very large on the energy infrastructure side in particular to really monetize a lot of these opportunities.

TWST: Let's talk about the developing world just for a minute. Are you seeing pockets of strength in certain geographies or is it fairly strong across the board?

Ms. Afzal: It is probably across the globe in a sense. The countries where you see a lot of demand for resources and resource development have even included Australia, China, India, Brazil. Those are the key countries that a lot of our companies focus on. Sometimes they are directly building infrastructure and energy resources there, and sometimes they are building stuff that caters the demand in those countries.

For example, a lot of liquefied natural gas plants, which are a growing source of gas into these countries in China and India in particular, that gas is really being developed in places where there is a lot of gas, then it's transported to these countries, and a lot of the E&P companies are really involved both in the whole construction supply chain around that.

TWST: The energy sector is definitely interesting. Are you seeing companies making changes or adaptations to better take advantage of that oil and gas boom?

Ms. Afzal: There has definitely been a bit of M&A...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.