Cliff Brewis presentation at Construction Outlook 2012

1. Cliff Brewis
Senior Director, Operations
McGraw-Hill Construction

2. Where We Have Been
Total Construction Activity by Cycle
Cyclical Trough (T) = 100, Based on Constant 2000 Dollars
190
175
1975-1982
160
145
1982-1991 1991-2012
130
115
100
85
70 1991- 2005
T T+2 T+4 T+6 T+8 T+10 T+12 T+14 T+16 T+18 T+20 T+22
Years from Cyclical Trough

3. The Overall Economy
The US Economy has upside limits and downside potential.
GDP Pattern:
Real GDP Growth Quarterly “11Q2
+1.3% History Forecast
7 2009 2010 2011 2012
5
-3.5% +3.0% +1.6% +2.0%
3
1
-1
-3
-5
Major Inhibitors:
-7 – Intractable Housing
-9
01 02 03 04 05 06 07 08 09 10 11 12 – Budget Deficit
– Unemployment/Demand
– Europe

4. Area of Concern: Public Construction Funding
Pushing down on the economy
Federal Budget Surplus/Deficit
Billions of Dollars, CBO Projections State and Local Revenues
400
200
0
-200
-400
-600
-800
-1,000
-1,200
-1,400
-1,600
90 92 94 96 98 00 02 04 06 08 10 12

5. Significance Of Housing
Best Indicator of Local Market Strength
S&P Case Shiller Home Price Index
20-Metro Composite, Indexed: Jan. 2000=100
220
200
180
160
140
120
100
01 02 03 04 05 06 07 08 09 10 11 12

6. Employment by State

7. California: Single Family
$40,000,000
$35,000,000
$30,000,000
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
‘$000.00

8. California: Multi Family
$8,000,000
$7,000,000
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
‘$000.00

9. U.S. • Multifamily Housing
Top 8 Metros – September YTD 2011 vs. 2010
New York
+32%
Washington DC +183%
Boston
+32%
Dallas
+270%
+36%
Chicago 2010 2011
+170%
Seattle
+66%
Los Angeles
+57%
Miami-Fort Lauderdale
0.0 0.5 1.0 1.5 2.0 2.5 3.0
Value in Billions

10. California: Retail/Warehouses
Retail
$3,000,000 Warehouses
$2,500,000
$2,500,000
$2,000,000 $2,000,000
$1,500,000
$1,500,000
$1,000,000
$1,000,000
$500,000
$500,000
$0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
$0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
‘$000.00

11. California: Offices
$5,000,000
$4,500,000
$4,000,000
$3,500,000
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
‘$000.00

12. U.S. Commercial Buildings • Offices
Top 8 Metros – September YTD 2011 vs. 2010
- 48%
New York
Salt Lake City +1200%
Boston +134%
-52%
Washington DC
Houston
+143
Chicago +26% 2010 2011
Minneapolis-St. Paul +428%
Seattle
+83%
0.0 0.5 1.0 1.5 2.0 2.5 3.0
Value in Billions

13. California: Healthcare
$3,500,000
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
‘$000.00

14. California: Education
$9,000,000
$8,000,000
$7,000,000
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
‘$000.00

15. U.S. Institutional • Educational Buildings
K-12 School Construction larger than Colleges/Universities/
Community Colleges, particularly in sq. ft. terms, less so in dollar terms.
K-12 has typically shown steeper up-and-down swings.
Education Buildings - Segments Education Buildings - Segments
Millions of Sq. Ft. Billions of Dollars
200 40
175 35
K-12 Schools K-12 Schools
150 30
125 25
100 20
Colleges/Universities/
75 15
Community Colleges
Colleges/Universities/
50 10
Community Colleges
25 5
0 0
90 92 94 96 98 00 02 04 06 08 10 12 90 92 94 96 98 00 02 04 06 08 10 12
• In 2010, sq. ft for K-12 school construction • In 2010, dollars for K-12 school construction
was 3.6 times the size for Colleges/ was 2.3 times the size of Colleges/Universities/
Universities/Community Colleges Community Colleges

16. U.S. Institutional • Educational Buildings
Top 5 States – September YTD 2011 vs. 2010
-11%
New York
-34%
California
-35%
Texas
+17%
Massachusetts
2010 2011
-14%
Ohio
0.0 1.0 2.0 3.0 4.0 5.0
Value in Billions

17. California: Public ex Schls
$1,800,000
$1,600,000
$1,400,000
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
$0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
‘$000.00

18. California: Highways
$4,500,000
$4,000,000
$3,500,000
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
‘$000.00

19. U.S. Public Works • Highways & Bridges
Top 5 States – September YTD 2011 vs. 2010
+24%
Texas
+2%
California
+112%
Washington
2010 2011
-29%
Illinois
-35%
Florida
0.0 1.0 2.0 3.0 4.0 5.0 6.0
Value in Billions

20. California:
Structure Type 2006 2007 2008 2009 2010 2011 2012
EDUCATION $6,693,899 $5,624,163 $8,389,268 $4,243,638 $5,461,528 $3,652,842 $3,453,074
-16.0% 49.2% -49.4% 28.7% -33.1% -5.5%
GOVT x schls $917,450 $901,991 $941,567 $1,651,554 $589,838 $1,109,676 $1,003,439
-1.7% 4.4% 75.4% -64.3% 88.1% -9.6%
HEALTH $2,105,817 $3,128,049 $2,325,602 $2,953,438 $2,940,200 $3,164,533 $3,144,388
48.5% -25.7% 27.0% -0.4% 7.6% -0.6%
HIGHWAY $3,586,689 $3,584,021 $4,135,368 $3,617,681 $3,578,835 $3,692,858 $3,639,106
-0.1% 15.4% -12.5% -1.1% 3.2% -1.5%
HOTEL $1,268,243 $1,132,320 $544,434 $556,980 $114,601 $147,377 $220,710
-10.7% -51.9% 2.3% -79.4% 28.6% 49.8%
MFG $694,380 $516,590 $512,135 $568,810 $257,108 $355,898 $420,674
-25.6% -0.9% 11.1% -54.8% 38.4% 18.2%
MULTI RES $7,286,060 $5,458,202 $3,741,078 $963,068 $1,541,216 $1,523,600 $2,077,791
-25.1% -31.5% -74.3% 60.0% -1.1% 36.4%
OFFICE $3,509,386 $3,359,340 $1,862,668 $1,462,696 $948,541 $780,430 $838,371
-4.3% -44.6% -21.5% -35.2% -17.7% 7.4%
ONE FAMILY $25,689,625 $16,847,205 $8,882,785 $6,889,277 $7,167,967 $6,332,685 $6,686,356
-34.4% -47.3% -22.4% 4.0% -11.7% 5.6%
RETAIL $2,185,000 $2,782,949 $2,013,468 $998,577 $936,040 $910,142 $1,022,755
27.4% -27.6% -50.4% -6.3% -2.8% 12.4%
WAREHOUSE $1,409,346 $1,363,134 $1,214,879 $448,252 $217,810 $298,518 $408,937
-3.3% -10.9% -63.1% -51.4% 37.1% 37.0%
WATER $1,716,305 $2,049,777 $2,004,652 $1,582,216 $1,684,722 $1,141,553 $1,155,952
19.4% -2.2% -21.1% 6.5% -32.2% 1.3%
TOTAL $67,998,286 $59,244,698 $48,043,677 $35,672,178 $40,892,129 $42,431,483 $42,217,077
-12.9% -18.9% -25.8% 14.6% 3.8% -0.5%
‘$000.00

21. Questions?
Cliff Brewis
Senior Director Operations
McGraw-Hill Construction/Dodge
510-566-0913
cliff_brewis@mcgraw-hill.com

22. Appendix
National numbers

23. U.S. Total Construction Starts for 2012
Billions of Dollars 2007 2008 2009 2010 2011 2012
Total Construction 641.0 556.8 425.9 428.6 409.8 411.8
-7% -13% -24% +1% -4% -0-
100.8 81.4 47.1 41.3 43.9 47.4
Commercial Bldgs. +9% -19% -42% -12% +6% +8%
117.7 130.6 112.0 109.7 93.6 92.1
Institutional Bldgs. +6% +11% -14% -2% -15% -2%
20.8 31.0 9.7 9.2 12.4 12.9
Manufacturing Bldgs. +51% +49% -69% -5% +35% +4%
201.2 122.4 94.3 100.0 94.7 104.6
Single Family Housing -26% -39% -23% +6% -5% +10%
60.3 38.2 17.9 21.0 23.6 28.0
Multifamily Housing -13% -37% -53% +17% +13% +18%
121.3 121.1 123.6 119.0 99.6 94.8
Public Works +8% -0- +2% -4% -16% -5%
19.0 31.9 21.2 28.5 42.0 32.0
Electric Utilities +7% +68% -34% +34% +48% -24%

24. Risks to the Forecast
Baseline Forecast Recession Forecast
2011 2012 2011 2012
Total Construction -4% -0- -5% -7%
Commercial Bldgs. +6% +8% +5% -6%
Institutional Bldgs. -15% -2% -15% -3%
Manufacturing Bldgs. +35% +4% +30% -5%
Single Family Housing -5% +10% -6% -2%
Multifamily Housing +13% +18% +12% -5%
Public Works -16% -5% -17% -7%
Electric Utilities +48% -24% +45% -35%