Data-Based Consulting Heavy Equipment Rental In this month’s newsletter: 2 Monthly Commentary and Summary 3 Recent Industry News 6 Loan Market Update & Technical Conditions Knowledge-Based Cons. Non-Heavy Equip. Rental 8 Revolver and Term Loan Recent Issuance 11 Investment Grade Bond Market Update & Outlook 13 Investment Grade Recent Bond Issuance 14 Investment Grade Debt Comparables Advertising / Marketing Facility Services 17 High Yield Bond Market Update & Outlook 19 High Yield Recent Bond Issuance 20 High Yield Debt Comparables 22 Equity Capital Markets Update & Outlook Printing Services Auction Services 24 Equity Capital Markets Relative Valuation 25 Equity Capital Markets Recent Issuance 26 Operating Statistics Diversified / Other 29 Macroeconomic Indicators 32 Current Interest Rate Environment 33 Notable Mergers and Acquisitions Activity 36 KeyCorp & KBCM Overview & Capabilities Disclosure: KeyBanc Capital Markets is a trade name under which corporate and investment banking products and services of KeyCorp and its subsidiaries, KeyBanc Capital Markets Inc., Member NYSE/FINRA/SIPC, and KeyBank National Association (“KeyBank N.A.”), are marketed. Securities products and services are offered by KeyBanc Capital Markets Inc. and its licensed securities representatives, who may also be employees of KeyBank N.A. Banking products and services are offered by KeyBank N.A. This report was not issued by our research department. The information contained in this report has been obtained from sources deemed to be reliable but is not represented to be complete, and it should not be relied upon as such. This report does not purport to be a complete analysis of any security, issuer, or industry and is not an offer or a solicitation of an offer to buy or sell any securities. This report is prepared for general information purposes only and does not consider the specific investment objectives, financial situation and particular needs of any individual person or entity. Business Services Monthly February 2016 – Monthly Commentary Monthly Commentary . The KeyBanc Business Services Index (“KBBS”) was up for the second straight month, registering a 2.5% move, which . The KeyBanc Business Services Index (“KBBS”) was up for outpaced the 2.2% gain posted by the S&P 500. Six of the nine tracked subsectors finished the month up (pg. 23) the month, registering a 3.1% move, which outpaced the 0.5% . Debt market activity continued to remain healthy for business services companies. Revolver and term loan activity was flat gain recorded by the S&P 500. Six of the nine tracked m/m, the IG bond market saw 4 issuers come to market, and HY issuers stayed on the sidelines. The IG market has now had subsectors posted gains for June (pg. 23) activity in six of the past nine months, with HY activity in nine of the past eleven months (pg. 8, 13, & 19) . Debt market activity continued to remain healthy for business . The Professional & Business Services (“P&B”) sector added 31,000 jobs in May. Year over year, the P&B sector continues to services companies. Numerous revolvers and term loans . How those market outpace overall nonfarm payroll growth, 2.4% vs. 1.6%, respectively (pg. 29) participants digest recent placed, along with one investment grade tranche. The high volatility may have an . The interest rate curve fell as the 3 month LIBOR rate dropped 4 bps to 2.32% while the 30 year treasury rate declined 11 bps yield bond market took a breather and was inactive for the impact on near-term and to 3.00%. The belly of the curve remained active with the 5 year treasury rate also dropping 11 bps to 2.68% (pg. 2 & 32) first time in 16 months (pg. 8, 13, & 19) mid-term market activity . The business services M&A market remained active and was up when compared to activity this time last year (pg. 33) . Professional & Business Services (“P&B”) companies added and general market sentiment . Tax reform, record low volatility, and improved economic forecasts, amongst other factors, contributed to the market grinding 35,000 jobs in June. Year over year, the P&B’s sector higher throughout 2017. Although there are some geopolitical and global trade tensions, along with economic uncertainties continues to outpace overall nonfarm payroll growth, 3.1% vs. The KeyBanc Business Services Index (“KBBS”) was down for abroad, market participants have continued to focus on domestic themes, which are mostly favorable 1.6%, respectively (pg. 29) the month, registering a (0.3)% move, which outperformed the Indices Exchange Rates Interest Rates . The interest rate curve continued to flatten throughout the (2.7)% loss the S&P 500 posted. Five of the nine tracked month, with the 3 month LIBOR rate increasing 9 bps to subsectors finished the month up (pg. 22) As of % Change As of % Change vs. USD As of Bps Change 1.30%, while the 30 year treasury rate fell 3 bps to 2.84% (pg. Debt market activity continued to remain healthy for business 5/31/2018 1 Month 1 Year 3 Years 5/31/2018 1 Month 1 Year 3 Years 5/31/2018 1 Month 1 Year 3 Years 2 & 32) DJIA 24,415.8 1.0% 16.2% 35.6% Euro 1.166 (3.4)% 3.8% 6.2% 3m Libor 2.32% (4) 111 204 services companies, picking up from last month’s slowdown. The business services M&A market was dominated by smaller S&P 500 2,705.3 2.2% 12.2% 28.4% CAD 0.770 (1.2)% 4.1% (3.7)% 1y r T-Rate 2.23% (1) 106 197 Revolver and term loan activity was up m/m and when transactions, but had its largest transaction count since February compared to the same period a year ago. One investment Nasdaq 7,442.1 5.3% 20.1% 46.8% Renminbi 0.156 (1.2)% 6.2% (3.3)% 3y r T-Rate 2.54% (8) 110 160 (pg. 33) grade bond priced, marking IG activity for the fourth time in six NYSE 12,527.1 0.1% 8.0% 13.3% Peso 0.050 (6.2)% (6.5)% (23.0)% 5y r T-Rate 2.68% (11) 93 119 . Elevated economic and monetary policy uncertainty in the months, while three high yield bonds came to market (pg. 8, AMEX 2,751.8 5.3% 5.4% 13.3% Yen 0.009 0.5% 1.7% 14.0% 7y r T-Rate 2.78% (13) 76 92 U.S., along with geopolitical tensions abroad, continues to 12, & 18) Russell 2000 1,633.6 5.9% 19.2% 31.1% Pound 1.329 (3.4)% 3.0% (13.0)% 10y r T-Rate 2.83% (12) 62 71 keep the overall market in a slightly tepid mood. Until there is . Professional & Business Services (“P&B”) companies added Russell 3000 1,610.7 2.6% 12.9% 27.9% 30y r T-Rate 3.00% (11) 13 12 more clarity around these issues, continue to expect a 50,000 jobs in February. Year over year, the P&B’s sector Business Services Summary (as of 5/31/2018) cautious approach from market participants continues to outpace overall nonfarm payroll growth, 2.4% vs. Stock Performance EV / EBITDA As % of Revenue 1.6%, respectively (pg. 28) . The interest rate curve steepened as the 3 month LIBOR rate % of 52 Gross Operating . The KeyBanc Business Services Index (“KBBS”) was down for the month, registering a (0.8)% move, which lagged the 2.2% 1 Month 1 Year 3 Year Week High LTM NTM Profit Income SG&A increased 24 bps to 2.02% while the 30 year treasury rate rose gain by the S&P 500. Four of the nine tracked subsectors posted gains (pg. 22) 18 bps to 3.13%. The belly of the curve remained active with the Data-Based Consulting 3.3% 19.3% 31.9% 93.7% 18.6x 15.1x 62.9% 21.3% 29.4% . Debt market activity continued to remain healthy for business services companies. Although revolver and term loan activity Knowledge-Based Consulting 3.3% 29.4% 44.6% 95.1% 12.9x 11.8x 31.5% 8.4% 23.2% 5 year treasury rate increasing 13 bps to 2.65% (pg. 2 & 31) was soft, it was comparable to the same period a year ago. One investment grade bond tranches priced, along with two high Advertising / Marketing 3.5% (4.2%) (27.3%) 75.7% 9.2x 8.3x 31.2% 12.2% 21.9% . The business services M&A market remained active, but was yield bond tranches. This activity continues the high yield markets positive momentum - bringing the three month high yield Heavy Equipment Rental 7.8% 61.0% 45.3% 79.4% 9.9x 8.7x 43.6% 21.8% 15.5% slightly down when compared to activity this time last year (pg. 32) bond issuance total to $5.7bn (pg. 8, 12, & 18) Move translucent box Non-Heavy Equipment Rental 8.8% 35.1% 83.5% 99.0% 14.2x 13.4x 41.3% 13.4% 25.1% . Tax reform, record low volatility, and improved economic as needed Facility Services (1.2%) 1.2% 45.5% 86.3% 13.8x 9.9x 20.9% 9.5% 9.3% . Professional & Business Services (“P&B”) companies added 13,000forecasts, jobs amongst in September. other factors, Year overcontributed year, the to P&B’sthe market sector Printing Services (4.6%) 6.7% 10.8% 72.1% 6.2x 6.2x 25.8% 4.1% 15.4% continues to outpace overall nonfarm payroll growth, 2.6% vs.grinding 1.2%, respectively higher throughout (pg. 28) 2017. Although there are some Auction Services 4.3% 35.6% 93.1% 96.6% 18.4x 16.6x 48.4% 23.7% 18.9% .