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Industry Report
August 26, 2012
Energy and Industrials Weekly - Looking To and Past
Wyoming... Energy & Industrials
Our Call Peter Arment
Ahead of the annual Jackson Hole retreat, commodities have been quietly basing (646) 376-5336
and trending higher. While prepared speeches may be nuanced, fundamentals parment@sterneagee.com
suggest further monetary policy accommodation among most every developed Michael S. Dudas, CFA
and developing government. In this edition of E&I Weekly, we focus on equity (646) 376-5329
implications from this week's Jackson Hole conference. mdudas@sterneagee.com
■ While not placing too much emphasis on the musings and data flow out of the Stephen D. Gengaro
Jackson Hole policy fest, markets appear to be discounting more of the same (646) 376-5331
sgengaro@sterneagee.com
as central bankers and governments attack expansive debt metrics. Recent job,
economic and headline inflation data should not drive any major reversal in Jeffrey A. Kauffman
policies, which should be more supportive of commodity prices. Federal Reserve (212) 338-4765
jkauffman@sterneagee.com
Chairman Bernanke most likely will indicate that Fed policy makers stand ready
to consider further steps, even if not acting immediately. Michael Ward, CFA
(646) 376-5375
■ The release of the minutes from Fed's July 31-August 1 meeting indicates that mward@sterneagee.com
the Fed is leaning towards launching another round of quantitative easing. The
minutes showed that apart from spillover effects from European financial crisis, Tim Rezvan, CFA
(212) 338-4736
Fed officials remain concerned about the possible fiscal cliff and the impact on trezvan@sterneagee.com
household and business spending from the uncertainty surrounding U.S. fiscal
policy. It seems to us that QE3 would include large-scale asset purchases. Todd Vencil, CFA
(804) 282-7385
■ Though we have seen an uptick in economic data in the past couple of weeks, tvencil@sterneagee.com
most economists believe the recent uptick is not substantial enough to persuade
Kevin Bennett, CFA
the Fed to hold off on quantitative easing. However, we do note that there are (804) 282-4506
some economists, including Federal Reserve Bank of St. Louis President James kbennett@sterneagee.com
Bullard, who believe the recent improvement in economy should prompt the Fed
Grant Fox
to hold off on additional monetary stimuli.
(212) 338-4723
■ Sterne Agee Chief Fixed Income Strategist Sharon Lee Stark continues to gfox@sterneagee.com
anticipate some action from the Fed this fall, perhaps as early as the September Satyadeep Jain
12-13 FOMC meeting. Stark does not expect the Fed to stay on the sidelines and (646) 376-5357
say the central bank has done all it can do, when there are clearly more tools that sjain@sterneagee.com
can be employed to stimulate the economy. Stark believes the Fed's role is even Ryan Mueller
more critical given the political infighting in Washington that would threaten (212) 338-4732
what minimal momentum exists in a sluggish economy. rmueller@sterneagee.com
■ In Exhibits 1 and 2 on next page, we present our analysis on indices’ performance Josh W. Sullivan
during and after quantitative easing. Broad stock market as well specific sub- (646) 376-5337
sectors such as industrials, energy and commodities recorded sizable gains jwsullivan@sterneagee.com
during both rounds of quantitative easing. QE1 turned out be longer and more Patrick Uotila, CPA
effective and led to higher gains for indices than QE2. Since Operation Twist (646) 376-5358
has not resulted in an expansion of the Fed's balance sheet, the program has not puotila@sterneagee.com
been as effective (in terms of an increase in indices) as earlier rounds of easing. Sal Vitale
■ Energy sector underperformed S&P500, industrials and commodities sectors (212) 338-4766
svitale@sterneagee.com
during QE1, but more than made up through solid out-performance during QE2.
S&P500, Industrials and Energy on average saw a 10% decline from the end of
QE1 to the beginning to QE2 and saw an even higher drop from the end of QE2
to the beginning of Operation Twist. Commodities have traded more or less in
line with industrials and energy sectors through these rounds of monetary easing.
Gold has had a good run, with or without QE, but price gains during QE have
been higher than those post QE. However, we note that gold prices have declined
somewhat during Operation Twist.
Important Disclosures regarding Price Target Risks, Valuation Methodology, Regulation Analyst Certification,
Investment Banking, Ratings Definitions, and potential conflicts of interest begin on Page I of the Appendix Section.
800 Shades Creek ParkwaySuite 700Birmingham, AL 35209205-949-3500
Sterne, Agee & Leach Inc. is Member NYSE, FINRA, SIPC
August 26, 2012
Figure 1: Performance of Various Indices during Quantitative Easing
240
Operation Twist
220
QE2
200
QE1
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100
80
60
Jun-09
Jun-10
Jun-10
Jun-11
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Apr-09
May-09
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Apr-11
May-11
Apr-12
May-12
Jul-09
Jul-09
Jul-10
Jul-11
Jul-12
Oct-09
Oct-10
Nov-08
Nov-09
Oct-11
Aug-09
Aug-10
Nov-10
Aug-11
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Aug-12
Dec-08
Jan-09
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Jan-11
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Feb-11
Sep-11
Feb-12
Mar-09
Mar-10
Mar-11
Mar-11
Mar-12
S&P 500 S&P Industrials Index S&P Energy Index CRB-All Commodities Gold
Source: Bloomberg, Standard & Poors, Commodity Research Bureau, Sterne Agee
Note: Although QE2 officially started on November 3, 2010, most indices started moving higher when Fed Chairman Ben Bernanke hinted at QE2 at
Jackson Hole symposium on August 27, 2010. Therefore, for our analysis, we have used August 27, 2010 as start date for QE2.
Figure 2: Analysis of Indices’ Performance during and after Quantitative Easing
During
During After During After Operation
QE1 QE1 QE2 QE2 Twist
S&P500 36% -9% 24% -12% 20%
S&P Industrials 38% -9% 27% -10% 20%
S&P Energy 20% -10% 45% -17% 13%
CRB-All Commodities 36% 6% 21% -4% -6%
Gold 36% 11% 21% 19% -6%
Source: Bloomberg, Standard & Poors, Commodity Research Bureau, Sterne Agee
Page 2
August 26, 2012
Table of Contents
Summary Page 4
Aerospace & Defense Page 5
Auto, Auto Parts and Auto Retailers Page 6
Coal Page 7
Engineering & Construction Page 8
Construction Materials & Diversified Industrials Page 9
Oil & Gas Page 10
Precious Metals Page 11
Transportation Page 12
Page 3
August 26, 2012
Energy and Industrials Weekly
Indicator Latest Previous Date Year over Year Change % Low 52-Week Range ● Latest High Status
Aerospace & Defense
Intl Revenue Passenger Traffic Total (y/y%) 7.4% 5.6% Jun n/a n/a ##
Intl Available Seat Kilometers Total (y/y%) 5.0% 4.1% Jun n/a n/a ##
Intl Freight Tonne kilometers (y/y%) 1.1% -2.2% Jun n/a n/a ##
Intl Passenger Load Factor Total 81.0 77.0 Jul |||||| 6.9% 74.4 l 83.1 ##
Auto & Auto Parts
Total Vehicle Sales - BRIC (mil.) 2.28 2.49 Jul |||||||||| 10.3% 2.07 l 2.79
Total Vehicle Sales - Brazil 364,157 353,190 Jul ||||||||||||||||||| 19.1% 249382 l 364157
Total Vehicle Sales - Russia 532,100 567,982 Jul |||||||||||| 12.6% 323472 l 567982
Total Vehicle Sales - India 269,977 273,932 Jul |||||||| 8.9% 246412 l 384413
Total Vehicle Sales - China (mil.) 1.38 1.58 Jul |||||||| 8.1% 1.28 l 1.84
Coal
Total U.S. Coal Exports (1000 tons) 12,916 12,354 Jun |||||||||||||||||||| 40.8% 7928 l 12916 ##
U.S. Weekly Coal Production (1000 tons) 20,452 19,791 Aug 17 -3.7% | 17737 l 22106
API2 (Delivered to Europe) Coal (USD/tonne) $94.20 $94.90 Aug 24 -24.5% |||||||||||| 86.20 l 128.75
Construction Materials & Diversified Industrials
U.S. Housing Starts (thous.) 746 754 Jul |||||||||| 21.3% 551 l 754 ##
U.S. Housing Prices - S&P Case-Shiller Index (SA) 139.9 138.7 May -0.9% 136.4 l 141.2 ##
Highway Contract Awards - 3 mo avg (mil.) $3,949 $3,668 Jul 0.4% 2193 l 4359 ##
Architecture Billings Index 48.7 45.9 Jul n/a 4.1% 45.8 l 51.3 ##
Engineering & Construction
WTI Crude Oil Spot $95.82 $95.97 Aug 24 |||||||||||| 12.4% 75.67 l 109.49 ##
Brent Crude Oil Front Month $113.12 $115.01 Aug 24 || 2.7% 89.2 l 126.2 ##
Henry Hub Natural Gas Spot $2.81 $2.81 Aug 24 -30.0% |||||||||||||| 1.82 l 4.18 ##
World Hot Rolled $670.00 $660.00 Aug 21 ||| 3.5% 590 l 735 ##
Copper (US/mt) $7,677 $7,599 Aug 23 -13.1% |||||| 6722 l 9258
Oil & Gas
Henry Hub Natural Gas Front Month $2.70 $2.80 Aug 24 -35.7% ||||||||||| 1.91 l 4.05 ##
Henry Hub Natural Gas 12mo Strip $3.23 $3.31 Aug 24 -17.5% ||||| 2.56 l 4.43 ##
WTI Crude Oil Front Month $95.75 $96.27 Aug 24 |||| 12.4% 75.67 l 109.77 ##
WTI Crude Oil 12mo Strip $96.56 $97.25 Aug 24 ||| 10.4% 77.00 l 110.03 ##
Brent Crude Oil Front Month $113.01 $115.01 Aug 24 2.6% 89.23 l 126.22 ##
Brent Crude Oil 12mo Strip $110.24 $111.98 Aug 24 1.2% 90.59 l 122.98 ##
Ethane - Mont Belvieu $13.23 $14.28 Aug 24 -55.5% |||||||||||||||||| 11.55 l 40.43
Baker Hughes US Rig Count 1,898 1,914 Aug 24 -3.9% | 1898 l 2026
Precious Metals
Gold (USD/oz.) $1,669.60 $1,670.60 Aug 23 -8.7% |||||||| 1540 l 1900 ##
US Dollar Index 81.60 81.36 Aug 24 |||||||||| 10.7% 73.72 l 84.01
Comex Net Positions in Gold (contracts) 143,940 146,418 ||||||||||||||||||||||||||||||||||||||||||
Aug 14 -42.2% 130709 l 287634
Transportation
U.S. ISM Manufacturing Index 49.8 49.7 Jul -3.1% | 49.7 l 55.8 ##
U.S. Industrial Production 98.0 97.4 Jul || 4.4% 93.1 l 98.0 ##
Gulf Coast Jet Fuel Prices (cents/gal.) 294.05 278.12 Jul -6.8% ||| 275 l 326 ##
U.S. Trade - Exports (mil.) $134,314 $133,086 Jun ||| 8.0% 119585 l 141256 ##
U.S. Trade - Imports (mil.) $193,855 $200,251 Jun -0.3% 173664 l 200251
On-Highway Diesel Fuel Prices (cents/gal.) 402.6 396.5 Aug 18 0.0% || 5.7% 365 l 415 ##
Source: Bloomberg, Company Reports, Sterne Agee Estimates
Page 4
August 26, 2012
Peter Arment (646) 376-5336 parment@sterneagee.com
Aerospace & Defense Josh W. Sullivan (646) 376-5337 jwsullivan@sterneagee.com
Indicator Latest Previous Date Year over Year Change % Low 52-Week Range ● Latest High Status
Macro Indicators
US Real GDP (y/y%) 2.10% 2.20% Jul -27.6% ||||||||||||| 2.05 l 3.10
BRICS Real GDP (y/y%) 6.31% 6.43% Jun -2.8% | 6.31 l 6.49
ISM Manufacturing PMI 49.8 49.7 Jun -10.8% ||||| 49.7 l 55.8
Aerospace Metrics
Intl Revenue Passenger Traffic Total (y/y%) 7.4% 5.6% Jun n/a n/a
Intl Available Seat Kilometers Total (y/y%) 5.0% 4.1% Jun n/a n/a
Intl Freight Tonne kilometers (y/y%) 1.10% -2.20% Jun n/a n/a
Premium (Business Class) Air Traffic (y/y%) 1.7% 5.8% May n/a n/a
Intl Passenger Load Factor Total 81.0 77.0 Jun |||||| 6.9% 74.4 l 83.1
US CPI Airline Fares $297.83 $306.18 Jul -0.8% 297.83 l 314.11
Business Jet Activity (Takeoff & Landings) 327,450 342,968 Jun -0.8% 311346 l 349422
Commodity Pricing
Jet Fuel Spot Market Price (USD/gal) $298.42 $281.85 Jul -1.1% 281.37 l 329.84
Brent Blend Crude Oil Spot Price (USD/bbl) $116.01 $116.81 Aug 24 -1.3% 88.99 l 128.10
WTI Cushing Crude Oil Spot Px (USD/bbl) $95.82 $95.97 Aug 24 -1.6% 75.67 l 109.49
LME Nickel Cash (USD/MT) $16,424 $16,023 Aug 23 -32.6% |||||||||||||||| 15190 l 24954
LME Molybdenum Cash (USD/MT) $26,000 $24,500 Aug 23 -21.2% |||||||||| 24000 l 33500
LME Aluminum Alloy Cash (USD/MT) $1,779 $1,771 Aug 23 -25.8% |||||||||||| 1720 l 2405.50
Source: Bloomberg, Company Reports, Sterne Agee Estimates
This past week Qantas (QAN, $1.19, NR) announced its first annual operating loss since 1995, primarily on higher fuel costs and weak
international performance. Qantas also disclosed its plans to retain 15 787-8 orders for 2013, cancel 35 787-9 orders for 2014/15 with option
rights intact for 50 787-9 to commence in 2016. The Qantas aircraft cancellation hurts sentiment for BA and suppliers in the short term. While
there is evidence of weakness in demand within Europe, the primary factor driving this cancellation stems from the specific unprofitable cost
structure Qantas set-up within its international operations- too many new routes in pursuit of market share versus profitable expansion. We see
this has more of a one-off versus a trend to impact BA's backlog, especially with deferral rates running at below historical averages.
The BA Backlog Debate: The Qantas cancellation is part airline specific reflecting poorly planned international expansion routes coupled with
some underlining weakness in air travel demand mainly tied to Europe. So far, ytd air traffic globally remains healthy at 6.5% with capacity
growth at 4.7% and load factors at a robust 78%. While further weakness in Europe could further curb some air traffic in 2H12, so far the data
remains favorable to support higher OEM delivery rates. BA's backlog totaling 4,139 aircraft by region are: 1,514 from N.A., 674 from Europe,
461 South East Asia, 454 from East Asia, 326 from Middle East and 710 from rest of world.
BA Backlog Aircraft Deferrals Running Below Average: According to our analysis, BA’s deferrals within its backlog are running at near
trough levels compared to the range of the last 10 years. During the past 10 years, deferral rates in BA’s backlog have ranged from as low as 1%
to as high as almost 10% on an annual basis. The most recent peak was 2009 with aircraft deferrals topping 9% versus today’s rate at under 3%.
Source: Boeing, Sterne Agee estimates
Page 5
August 26, 2012
Auto, Auto Parts and Auto Retailers Michael Ward, CFA (646) 376-5375 mward@sterneagee.com
Indicator Latest Previous Date Year over Year Change % Low 52-Week Range ● Latest High Status
Latest Industry Data
NA Vehicle Production (mil.) 1.03 1.40 Jul |||||||||||||||||||||||
23.9% 0.83 l 1.46
European Vehicle Registrations (mil.) 1.46 1.77 Jul -1.9% | 1.20 l 2.02
U.S. Light Vehicle Dealer Inventory (days supply) 55 59 Jul |||||||||||||| 14.3% 48 l 67
Consumer's Ability & Willingness to Buy
U.S. Real per Capita Disposable Income $32,871 $32,783 Jul 1.0% 32286 l 32871
U.S. Unemployment Rate 8.3% 8.2% Jul -8.8% |||||||| 8.1 l 9.1
Consumer Confidence - Conference Board 65.9 62.7 Jul |||||||||||||| 14.4% 40.9 l 71.6
Consumer Confidence - University of Michigan 72.3 73.2 Jul | 1.1% 55.7 l 79.3
U.S. Housing Prices - NAR (thous.) $237 $239 Jul |||| 4.4% 201 l 239
U.S. Housing Prices - S&P Case-Shiller Index 139.0 135.9 May 0.4% 134.1 l 143.0
MBA Mortgage Refinance Index $4,610 $5,077 Aug 17 ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
78.8% 2579 l 5453
AAA National Gas Price - Regular $3.52 $3.33 Jul -0.8% 3.28 l 3.93
New & Used Vehicle Pricing
Used Vehicle Prices - Manheim Index 121.2 123.4 Jul -4.9% |||| 121.2 l 127.8
Used Vehicle Prices - Adesa $9,893 $10,271 Jun -3.6% ||| 9750 l 10625
CPI - Used Vehicle Prices 153.18 153.90 Jul | 1.8% 148.05 l 153.90
CPI - New Vehicle Prices 144.62 144.78 Jul 0.8% 142.41 l 144.78
Average Industry Incentives $2,482 $2,548 Jul -4.1% |||| 2428 l 2676
Vehicle Financing / Retail vs. Fleet
ABS New Issuance (bil.) $9.2 $8.9 Jul ||||||||||||||||||||||||||||||||||||||||||||||||||
50.8% 0.1 l 12.4
Average Interest Rate - New Vehicles 5.07% 5.40% Feb -13.3% ||||||||||||| 5.07 l 5.94
Consumer Percent of U.S. Light Vehicle Sales 81.3% 81.2% May -1.0% 0.81 l 0.83
Consumer Lease - Percent of Receivables 20.2% 20.1% May ||||| 5.9% 0.19 l 0.20
U.S. Vehicle Miles Driven (bil.) 258.4 247.2 May || 2.3% 216.0 l 259.4
U.S. Retail SAAR (mil.) 12.3 11.8 Jul ||||||||||||||| 15.2% 10.4 l 12.3
U.S. Fleet SAAR (mil.) 1.8 2.5 Jul | 1.9% 1.7 l 2.7
Source: Bloomberg, Company Reports, Sterne Agee Estimates
One of the variables that contributed to the weakness in the auto stocks in the first half was a slowdown in the BRIC countries. Specifically,
lower demand in China and Brazil contributed to the market concerns in Europe – both countries are important markets for European exports
and both countries are important markets for GM and Ford. GM is the market leader in the BRIC countries – GM sells about four times as
many vehicles in the BRIC countries as it does in Europe and about 20% more than it sells in North America. Ford’s South American
operations have been its most consistent profit contributor over the last five years. The region has contributed about $5 billion in pretax profit
compared with about $2 billion from Europe since 2007. The rebound in the BRIC countries is good news for the industry, helping support
European production - about 20% of the exports from Germany go to the BRIC countries.
Page 6
August 26, 2012
Michael S. Dudas, CFA (646) 376-5329 mdudas@sterneagee.com
Coal Satyadeep Jain (646) 376-5357 sjain@sterneagee.com
Indicator Latest Previous Date Year over Year Change % Low 52-Week Range ● Latest High Status
Export Data
North Queensland (AUS) Coal Exports (1000 tonnes) 6,027 6,932 Jun -3.6% | 5916 l 8058
Richards Bay (S. Africa) Coal Exports (1000 tonnes) 6,279 5,454 Jul |||||||||||||||||||||43.9% 3572 l 8084
Total U.S. Coal Exports (1000 tons) 12,916 12,354 Jun |||||||||||||||||||| 40.8% 7928 l 12916
U.S. Coal Data
U.S. Weekly Coal Production (1000 tons) 20,452 19,791 Aug 17 -3.7% | 17737 l 22106
AAR Weekly Coal Carloads 123,604 121,764 Aug 17 -8.5% |||| 97914 l 142058
Cooling Degree Days 74 92 Aug 16 ||| 7.2% 1.00 l 101
Coal Consumption (1000 tons) 71,698 62,958 Jun -14.7% ||||||| 51574 l 94294
Coal Stockpiles - Utilities (1000 tons) 198,422 202,815 Jun ||||||||| 19.7% 139224 l 203395
China
Qinhaungdao - Newcastle Price Diff. (USD/tonne) $34.30 $40.54 Jul ||||||| 14.9% 17.18 l 50.42
Qinhuangdao - Richards Bay Price Diff. (USD/tonne) $31.93 $39.61 Jul 1.0% 15.68 l 52.50
Thermal Coal Stockpiles - Qinhuangdao (10K tonnes) 673.0 725.1 Aug 17 -7.2% ||||||| 448.7 l 945.5
Chinese Total Coal Imports (1000 tonnes) 20,215,444 22,526,977 Jul ||||||| 15.3% 11098118 l 22526977
Chinese Coking Coal Imports (1000 tonnes) 3,925,528 6,490,220 Jul -3.2% ||| 2130196 l 6490220
Prices
Central Appalachia Coal (UDS/ton) $57.38 $57.88 Aug 23 -24.4% |||||||||||| 54.00 l 77.08
Power River Basin Coal (USD/ton) $10.00 $9.75 Aug 23 -28.8% |||||||||||||| 6.50 l 14.60
API2 (Delivered to Europe) Coal (USD/tonne) $94.20 $94.90 Aug 24 -24.5% |||||||||||| 86.20 l 128.75
API4 (Richards Bay - S. Africa) Coal (USD/tonne) $88.80 $89.25 Aug 23 -25.5% |||||||||||| 86.00 l 119.50
Newcastle Coal (USD/tonne) $91.35 $91.45 Aug 24 -26.9% ||||||||||||| 85.1 l 127.4
Natural Gas (USD/MMBtu) $2.81 $2.81 Aug 24 -29.1% |||||||||||||| 1.82 l 4.18
Freight Rates
Freight: NewsouthWales - ARA (USD/tonne) $18.80 $18.65 Aug 10 -17.7% |||||||| 16.7 l 26.6
Freight: Hampton Roads - ARA (USD/tonne) $11.20 $11.20 Aug 10 -29.6% |||||||||||||| 11.0 l 17.2
Freight: Richards Bay - ARA (USD/tonne) $12.20 $11.90 Aug 10 -26.5% ||||||||||||| 11.6 l 17.0
Steel
World Steel Production (1000 tonnes) 129,738 127,596 Jul 1.9% 115368 l 132608
World Steel Capacity Utilization 78.7% 80.4% Jul -1.3% 70.7 l 81.9
HRC Prices (USD/tonne) $631.64 $633.15 Aug 21 -19.4% ||||||||| 630.45 l 794.73
US Steel Inventories (1000 tons) 8,933 9,020 Jul ||| 6.2% 7937 l 9144
China Steel Inventories (1000 tonnes) 15,857 15,779 Jul ||||||| 15.7% 13344 l 18999
China Steel Production (1000 tonnes) 61,693 60,213 Jul || 4.0% 49883 l 61693
Source: Bloomberg, Company Reports, Sterne Agee Estimates
Key highlights from the week:
Coal had a good run this week, mainly driven by a court ruling on CSAPR. Companies with Appalachian and Illinois Basin thermal coal exposure had a
good run in the first half of the week, but gave away some of the gains later in the week on disappointing global data (US jobless claims, China
manufacturing data) and larger than expected build in natural gas inventories.
• EIA Electricity Monthly Update - Coal consumption of 71.7 mm tons during June was slightly higher than our 70.0 m tons estimate. However, stockpile
drawdown during June was only 4.5m tons vs. our 8.5m tons estimate. Coal’s share in electricity generation hit a low of 32.5% in April (at par with nat gas).
However, coal’s share has been inching up since then – 34% in May and 36% in June.
• Court Ruling on CSAPR – The US Court of Appeals Court vacated CSPAR as the EPA rule would have violated the Clean Air Act (CAA). This ruling
represents the second time in the past few weeks that a Court has decided the EPA has exceeded its statutory authority granted by Congress. We believe the
Court's mildly surprising decision supports incremental positive news.
• BHP Billiton (BHP-ASX, $32.20, NR) moth-balled its big uranium and copper project, Olympic Dam. The company also chose to delay the 2.5
million tonnes per annum (100 per cent basis) expansion of Peak Downs that is associated with the Caval Ridge mine development. Management expects
volatility in commodity markets to persist in the short term but remains bullish on medium term demand, given supportive policy and broad growth bias,
particularly in China.
• China July coal imports – Another strong 20+ million tonnes import month for China. China imported 20.21 million tonnes of coal in July, up 15% y/y
but down 10.3% sequentially. China has imported 133.12 million tonnes of coal YTD, up 51.75% compared with the same period last year.
• June Crude Steel Production - World crude steel production was 130 million tonnes (Mt) in July 2012, up 2.0% y/y and 1.5% sequentially. China’s crude
steel production for July 2012 was 61.7 Mt, up 4.2% y/y and 2.5% sequentially.
• This Week - Joy Global (JOY, $55.59, NR) releases Q3 results–We believe JOYG has a good read on the economy and mining. We believe it will be
interesting to see what management thinks about the near and medium term outlook for Chinese demand, commodity pricing.
Page 7
August 26, 2012
Michael S. Dudas, CFA (646) 376-5329 mdudas@sterneagee.com
Engineering & Construction Patrick Uotila, CPA (646) 376-5358 puotila@sterneagee.com
Indicator Latest Previous Date Year over Year Change % Low 52-Week Range ● Latest High Status
U.S. Macro
Architecture Billings Index 48.7 45.9 Jun n/a 6.1% 45.8 l 51.3
Consumer Confidence - University of Michigan 72.3 73.2 Jul |||||| 13.5% 55.7 l 79.3
Core CPI Inflation 0.1% 0.2% Jul |||||||||||||||||||||||||
-50.0% 0.1 l 0.2
ISM Manufacturing Index 49.8 49.7 Jul -3.1% | 49.7 l 55.8
U.S. Housing Starts (thous.) 746 754 Jul |||||||||| 21.5% 581 l 754
U.S. Private Res Construction (mil.) 265,602 262,120 Jun |||||| 12.1% 222417 l 265602
U.S. Private Non-Res Construction (mil.) 302,253 302,058 Jun |||||| 14.0% 252261 l 302253
U.S. Construction Spending Comm. (mil.) 46,801 47,727 Jun || 4.5% 43671 l 47727
U.S. Construction Spending Man. (mil.) 53,194 51,310 Jun ||||||||| 19.3% 38949 l 53194
World Macro
China Manufacturing Index $50.10 $50.20 Jul -1.2% 49.0 l 53.3
Eurozone Manufacturing Index $44.00 $45.10 Jul -12.7% |||||| 44.0 l 52.0
Oil & Gas
Brent Crude Oil Front Month $113.12 $115.01 Aug 24 || 2.7% 89.2 l 126.2
Ethane Spot $31.50 $34.00 Aug 24 |||||||||||||||||||||||||||
-55.6% 27.50 l 96.25
Henry Hub Natural Gas Spot $2.81 $2.81 Aug 24 -30.0% |||||||||||||| 1.82 l 4.18
WTI Crude Oil Spot $95.82 $95.97 Aug 24 |||||||||||| 12.4% 75.67 l 109.49
WTI 321 Crack Spread $28.90 $30.26 Aug 24 -15.6% ||||||| 12.99 l 37.96
WTI Crude Oil 12mo Strip $97.03 $98.13 Aug 24 |||||||||| 10.8% 77.00 l 110.03
World Hot Rolled $670.00 $660.00 Aug 21 ||| 3.5% 590 l 735
Commodities
Aluminum (USD/mt) $1,905 $1,875 Aug 23 -19.8% ||||||||| 1836 l 2469
Copper (US/mt) $7,677 $7,599 Aug 23 -13.1% |||||| 6722 l 9258
Gold (USD/oz.) $1,670 $1,671 Aug 24 -5.1% || 1540 l 1900
Silver (USD/oz.) $30.64 $30.58 Aug 24 -22.9% ||||||||||| 26.38 l 43.26
Indexes
S&P Construction & Engineering Index $211.81 $212.63 Aug 24 |||||||||| 10.1% 170 l 236
Source: Bloomberg, Company Reports, Sterne Agee Estimates
E&C names continue to recover outperforming broader markets on stronger investor confidence. While in some markets (Australia, Canadian
Oil Sands) sponsors continue to review project economics, other markets (U.S. Shale derivatives) continue to ramp up. In our view, E&C
equities remain underpriced. Retracted commodity prices continue to overshadow the opportunities that well positioned global E&C firms have
to pursue. Many commodity prices remain at investible levels and development should continue based on the longer term investment profiles.
Lower natural gas prices create multiple derivative opportunities in the U.S. which should help to offset weaker housing and public markets.
Robust opportunities remain present in the Canadian Oil Sands and international petrochemicals and hydrocarbons. We have buy ratings on
Chicago Bridge & Iron (CBI) (sustainable EPS growth), Fluor (FLR) (cyclical energy/mining), Jacobs Engineering (JEC) (broad-based
recovery), North American Energy Partners (NOA) (oil sands activity) and URS Corporation (URS) (strong cash flow). We have neutral
ratings on KBR, Inc. (KBR) (LogCap and award timing uncertainty) and Foster Wheeler (FWLT) (short-term limited booking visibility). We
have an underperform rating on Granite Construction (GVA) (budget uncertainty/competitive markets).
Page 8
August 26, 2012
Construction Materials & Todd Vencil, CFA (804) 282-7385 tvencil@sterneagee.com
Kevin Bennett, CFA (804) 282-4506 kbennett@sterneagee.com
Diversified Industrials
Indicator Latest Previous Date Year over Year Change % Low 52-Week Range ● Latest High Status
Construction / Materials
U.S. Const. Put in Place - Total (thous.) $842,082 $838,327 Jun |||||||| 8.5% 755420 l 842082
U.S. Aggregates Railcar Ship. - 4 wk avg 20,137 19,721 Aug 18 ||||||| 7.7% 9702 l 20798
U.S. Gypsum Industry Ship. (thous.) 4,280 4,477 1Q12 || 2.2% 4187 l 4477
U.S. Cement Industry Ship. (thous.) - 3 mo avg 7,118 6,584 Jun |||||||||||| 12.5% 4620 l 7277
Producer Price Index (PPI) - Heavy Const. 243.5 243.3 Jun |||| 4.4% 231.8 l 243.5
U.S. Const. Employment (thous.) 5,780 5,718 Jun | 1.3% 5133 l 5806
Housing
U.S. Const. Put in Place - Private Res. (thous.) $265,602 $262,120 Jun |||| 9.3% 222417 l 265602
U.S. Housing Starts (thous.) 746 754 Jul |||||||||| 21.3% 551 l 754
U.S. Building Permits (thous.) 811 760 Jul |||||||||||||| 28.1% 616 l 811
U.S. Housing Prices - S&P Case-Shiller Index (SA) 139.9 138.7 May -0.9% 136.4 l 141.2
U.S. New Home Sales (thous.) 372 359 Jul ||||||||||| 22.4% 292 l 372
U.S. Pending Home Sales (thous.) 99.3 100.7 Jun |||| 9.5% 86.9 l 101.1
U.S. Existing Home Sales (mil.) 4.47 4.37 Jul ||| 6.9% 4.05 l 4.63
U.S. New Home Inventory (thous.) 142 143 Jul -13.9% |||||| 142 l 169
U.S. Existing Home Inventory (mil.) 2.40 2.37 Jul -24.1% |||||||||||| 2.32 l 3.16
U.S. Total Home Inventory (mil.) 2.54 2.51 Jul -23.5% ||||||||||| 2.47 l 3.33
NAHB/Wells Fargo Housing Market Index 35 29 Jul ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
169.2% 13 l 35
NAHB Remodeling Market Index (RMI) 46 49 Mar -2.1% | 45 l 50
MBA Weekly Applications Survey 821.3 886.8 Aug 17 |||||||||||||||||||||||||||
55.5% 528.0 l 949.4
Non-Residential
Architecture Billings Index 48.7 45.9 Jul n/a 4.1% 45.8 l 51.3
U.S. Const. Put in Place - Priv. Non-Res (thous.) $302,253 $302,058 Jun ||||||||| 19.8% 239268 l 302253
U.S. Const. Put in Place - Coml. (thous.) $46,801 $47,727 Jun |||||||||| 20.2% 42153 l 47727
U.S. Const. Put in Place - Mfg. (thous.) $53,194 $51,310 Jun |||||| 13.7% 33885 l 53194
Public
U.S. Const. Put in Place - Total Public (thous.) $274,228 $274,149 Jun -2.2% || 272805 l 286058
U.S. Const. Put in Place - Hwy & Sts (thous.) $80,430 $79,261 Jun |||| 4.8% 75046 l 82802
Highway Contract Awards - 3 mo avg (mil.) $3,949 $3,668 Jul 0.4% 2193 l 4359
Source: Bloomberg, Company Reports, Sterne Agee Estimates
This week was was a good week for Construction Mateirals stocks, driven by an upbeat earnings report from Toll Brothers (TOL - $32.59- Not
Rated) as well as decent reports on new and existing home sales. Additionally, CEMEX (CX) reported that it was looking to sell a minority stake in
its Latin American assets in a move to address near-term liquidity concerns. This was certainly a positive development (and the stock rallied), but we
don't think it solves all of CX's problems as the company remains highly levered and faces serious headwinds from some of its major markets (e.g.
Spain).
In separate news, both USG Corp. (USG) and Eagle Materials (EXP) outperformed this week when National Gypsum (private), the #2 U.S.
wallboard producer, announced a 30% price increase for January 1, 2013. USG caught several competitor upgrades on the news, but we remain
skeptical that the industry will be able to realize another 30% increase next year. We hope to learn more about the planned price increase, and
whether USG will follow it, when we have management on the road on September 4th.
Page 9
August 26, 2012
Stephen Gengaro (646) 376-5331 sgengaro@sterneagee.com
Oil & Gas Tim Rezvan, CFA (212) 338-4736 trezvan@sterneagee.com
Grant Fox (212) 338-4723 gfox@sterneagee.com
Indicator Latest Previous Date Year over Year Change % Low 52-Week Range ● Latest High Status
Henry Hub Natural Gas Front Month $2.70 $2.80 Aug 24 -35.7% ||||||||||| 1.91 l 4.05
Henry Hub Natural Gas 12mo Strip $3.23 $3.31 Aug 24 -17.5% ||||| 2.56 l 4.43
WTI Crude Oil Front Month $95.75 $96.27 Aug 24 |||| 12.4% 75.67 l 109.77
WTI Crude Oil 12mo Strip $96.56 $97.25 Aug 24 ||| 10.4% 77.00 l 110.03
Brent Crude Oil Front Month $113.01 $115.01 Aug 24 2.6% 89.23 l 126.22
Brent Crude Oil 12mo Strip $110.24 $111.98 Aug 24 1.2% 90.59 l 122.98
Ethane - Mont Belvieu $13.23 $14.28 Aug 24 -55.5% |||||||||||||||||| 11.55 l 40.43
Baker Hughes US Rig Count 1,898 1,914 Aug 24 -3.9% | 1898 l 2026
Source: Bloomberg, Company Reports, Sterne Agee Estimates
Exploration & Production
This week we downgraded Ultra Petroleum (UPL) to underperform based on expectations of continued low natural gas prices through 2014.
Compared to our coverage group, the company is richly valued and has outperformed since mid June. QEP Resources (QEP) announced after
the close on Thursday it was acquiring a 27.6K net acre position in the Williston Basin for $1.38 billion. An oil acquisition was widely expected
and reflects QEP’s goal of diversifying its production stream to liquids (projected to be 26% of total production in 4Q12). QEP provided
aggressive estimated ultimate recoverable (EUR) assumptions of 1,160 mboe for Middle Bakken wells and 990 mboe for Three Forks wells.
Oilfield Services & Equipment
The international/deepwater offshore theme continues as three significant announcements for offshore service and equipment awards were
revealed last week, lending credence to the international offshore build-out story we have been highlighting. The following awards, two of which
were in the North Sea, were announced the week of 8/20.
Baker Hughes Inc. (BHI, Buy, PT $47) was awarded a 25-field drilling service contract from Statoil (STO, $25.16, Not Rated) for NOK3 billion
(approximately $504 million). The contract is for two years with an option to extend twice for two years apiece. The contract is for providing
directional drilling, MWD/LWD, mud logging and onshore support in STO's Norwegian Continental Shelf (NCS).
Schlumberger Ltd. (SLB, Buy, PT $89) announced a deal with Statoil worth more than NOK2 billion (app. $342 million plus) to provide
wireline logging service for all of STO's E&P licenses offshore Norway for four years. The contract has options for "several" extensions.
Dril-Quip Inc. (DRQ, Neutral) announced a $650 million valued contract with Petrobras (PBR, $21.73, Not Rated) for the supply of subsea
wellhead systems and associated equipment. The four-year contract is for the drilling of Brazilian offshore wells and expected delivery will
commence in the beginning of 2H13.
Page 10
August 26, 2012
Michael S. Dudas, CFA (646) 376-5329 mdudas@sterneagee.com
Precious Metals Satyadeep Jain (646) 376-5357 sjain@sterneagee.com
Indicator Latest Previous Date Year over Year Change % Low 52-Week Range ● Latest High Status
Commodities
Gold (USD/oz.) $1,669.60 $1,670.60 Aug 23 -8.7% |||||||| 1540 l 1900
Silver (USD/oz.) $30.64 $30.58 |||||||||||||||||||||||||
Aug 24 -25.9% 26.38 l 43.26
Oil - Brent Crude (USD/bbl) $113.12 $115.01 Aug 24 ||| 3.8% 89.79 l 122.73
Copper (USD/mt) $7,676.50 $7,599.00 Aug 24 -15.3% ||||||||||||||| 6721.50 l 9257.50
Currencies
US Dollar Index 81.60 81.36 Aug 24 |||||||||| 10.7% 73.72 l 84.01
Euro 1.25 1.26 Aug 24 -13.7% ||||||||||||| 1.21 l 1.45
Indian Rupee 55.50 55.26 Aug 24 -20.5% |||||||||||||||||||| 45.79 l 57.16
Japanese Yen 78.71 78.49 Aug 24 -2.2% 75.82 l 83.73
Swiss Franc 0.96 0.96 Aug 24 ||||||||||||||||| 17.6% 0.79 l 1.00
Monetary Indicators
Fed Balance Sheet (bil.) $2,828 $2,835 Aug 22 -1.2% | 2817 l 2940
ECB Balance Sheet (bil.) 3,086 € 3,087 € Aug 17 ||||||||||||||||||||||||||||||||||||||||||||||||
48.6% 1920 l 3102
China Monthly New Loans (bil.) 540.1 919.8 Jul ||||||||| 9.6% 470.0 l 1011.4
TIPS 120.34 120.40 Aug 24 ||||| 5.4% 113.62 l 121.49
3 month LIBOR 0.42% 0.43% Aug 24 |||||||||||||||||||||||||||||||
31.6% 0.31 l 0.58
Physical Indicators
Comex Net Positions in Gold (contracts) 143,940 146,418 ||||||||||||||||||||||||||||||||||||||||||
Aug 14 -42.2% 130709 l 287634
Comex Net Positions in Silver (contracts) 23,402 21,852 ||||||||||||||||||||||||||||||||||||||||||
Aug 14 -42.5% 12011 l 47306
Silver Inventories at Comex (1000 oz.) 139,218 145,933 Jul |||||||||||||||||||||||||||||||||
33.6% 99450 l 145933
Precious Metals Equities
XAU (PSE Gold & Silver Index) 168.33 168.41 Aug 24 -22.0%|||||||||||||||||||||| 141.60 l 227.03
HUI (NYSE ARCA Gold BUGS Index) 455.97 454.77 Aug 24 -23.6%||||||||||||||||||||||| 375.8 l 635.0
Source: Bloomberg, Company Reports, Sterne Agee Estimates
Key highlights from the week:
A good week for gold and silver prices and equities. Silver outperformed gold on the upside during the week. Prices increased on release of Fed
minutes which suggests Fed is leaning strongly toward launching a new round of quantitative easing.
• Fed minutes - Minutes of the Fed's July 31-Aug. 1 meeting, released last week, suggest Fed is leaning strongly toward launching a new round
of quantitative easing. Sterne Agee Chief Fixed Income Strategist Sharon Lee Stark continues to anticipate some action from the Fed this fall,
perhaps as early as the September 12-13th FOMC meeting.
• SPDR gold inflows – GLD ETF saw inflows of almost 12 tonnes this week. Investors bought SPDR gold fund ahead of release of Fed
minutes.
• Republicans eye return to gold standard
• All eyes on Jackson Hole this week
Page 11
August 26, 2012
Jeffrey A. Kauffman (212) 338-4765 jkauffman@sterneagee.com
Transportation Sal Vitale (212) 338 4765 svitale@sterneagee.com
Ryan Mueller (212) 338-4732 rmueller@sterneagee.com
Indicator Latest Previous Date Year over Year Change % Low 52-Week Range ● Latest High Status
U.S. Macro
U.S. ISM Manufacturing Index 49.8 49.7 Jul -3.1% | 49.7 l 55.8
U.S. Industrial Production 98.0 97.4 Jul || 4.4% 93.1 l 98.0
Gulf Coast Jet Fuel Prices (cents/gal.) 294.05 278.12 Jul -6.8% ||| 274.82 l 325.92
On-Highway Diesel Fuel Prices (cents/gal.) 402.60 396.50 Aug 18 || 5.7% 364.80 l 414.80
U.S. Trade - Exports (mil.) $134,314 $133,086 Jun ||| 8.0% 119585 l 141256
U.S. Trade - Imports (mil.) $193,855 $200,251 Jun -0.3% 173664 l 200251
Airlines
U.S. Revenue Passenger Miles 71.2 67.8 May 0.6% 57.5 l 80.4
U.S. Available Seat Miles 85.2 82.1 May 0.6% 75.0 l 92.5
Air Transport Associate Cargo Tonnage 9,856 10,476 Apr -0.9% 8633 l 11202
Trucking & Truck Equipment
ATA Truck Tonnage Index 118.8 118.8 Jul || 4.1% 114.1 l 124.4
ACT Class 8 Truck Net Orders 12,545 16,353 Jul -32.1% |||||||||||||||| 12545 l 29974
ACT Trailer Net Orders 14,373 14,014 Jul -3.6% | 13710 l 29536
Ceridien-UCLA Pulse of Commerce Index 97.24 92.44 May 1.5% 91.03 l 100.69
Cass Corp Freight Index - Shipments 1.14 1.15 Jul 1.8% 1.05 l 1.20
Cass Corp Freight Index - Expenditures 2.39 2.44 Jul 0.9% 2.27 l 2.45
Rails
Rail Carloads - Ex Grain, Coal, Intermodal 152,254 148,503 Aug 18 | 3.4% 118263 l 157643
Source: Bloomberg, Company Reports, Sterne Agee Estimates
Railroads: Positive outlook due to elevated automotive and housing-related shipments, with a moderate recovery in coal. Intermodal will
slow on moderate peak shipping season. Risk to agricultural sector due to extreme summer drought.
Airlines: Opportunistic outlook as conservative capacity management, positive cost performance and improving pricing offset higher fuel
costs and weak August optics on difficult comps. Entering bullish trade in September.
Trucking: Neutral outlook with capacity constraints due to EPA engine regulations and availability of drivers. Favor companies growing via
acquisition.
Logistics: Neutral outlook overall – positive for intermodal (although pricing weakening), neutral for international forwarding (although yields
improving), and negative for domestic truck brokerage, with the global economy facing strong headwinds in Europe and slowing in Asia.
Page 12
August 26, 2012
Sterne Agee Energy and Industrials Coverage Universe
Energy: Exploration & Production
Price Price Upside Shares Mkt Cap Assets Fiscal Yr. EPS P/E
Company Name Symbol Rating 8/25/2012 Target to PT Out. (mm) (mm) 2011A 2012E 2013E 2014E 2011A 2012E 2013E 2014E
Approach Resources Inc. AREX Neutral $27.61 NA NA 33.5 $930 $608 $0.69 $0.37 $0.87 -- 40.0x 74.6x 31.7x --
Berry Petroleum Co. BRY Buy $38.05 $53.00 39.29% 52.4 $1,978 $2,735 $2.71 $3.41 $4.21 -- 14.0x 11.2x 9.0x --
Chesapeake Energy Corp. CHK Neutral $19.39 NA NA 665.4 $12,842 $41,835 $2.85 $0.48 $1.39 -- 6.8x 40.4x 13.9x --
Denbury Resources Inc. DNR Neutral $15.56 NA NA 391.2 $6,013 $10,350 $1.43 $1.29 $1.23 -- 10.9x 12.1x 12.7x --
Energen Corp. EGN Buy $51.59 $60.00 16.30% 72.1 $3,694 $5,237 $3.91 $3.91 $5.36 -- 13.2x 13.2x 9.6x --
GeoResources Inc. GEOI Neutral $33.20 $37.00 11.45% 25.6 $851 $488 $1.36 $1.95 $2.27 -- 24.4x 17.0x 14.6x --
Gulfport Energy Corp. GPOR Buy $25.10 $38.00 51.39% 55.7 $1,386 $691 $2.22 $1.97 $2.54 -- 11.3x 12.7x 9.9x --
Noble Energy Inc. NBL Buy $87.27 $117.00 34.07% 177.8 $15,400 $16,444 $5.24 $4.81 $6.44 -- 16.7x 18.1x 13.6x --
Oasis Petroleum Inc. OAS Buy $29.41 $45.00 53.01% 93.3 $2,696 $1,727 $0.83 $1.33 $2.29 -- 35.4x 22.1x 12.8x --
Occidental Petroleum Corp. OXY Buy $87.90 $112.00 27.42% 809.9 $70,676 $61,704 $8.40 $6.51 $6.42 -- 10.5x 13.5x 13.7x --
PetroQuest Energy Inc. PQ Buy $6.34 $10.00 57.73% 64.1 $407 $516 $0.26 $0.10 $0.53 -- 24.4x 63.4x 12.0x --
Pioneer Natural Resources Co. PXD Buy $98.65 $131.00 32.79% 123.0 $11,828 $11,524 $3.77 $3.91 $5.64 -- 26.2x 25.2x 17.5x --
QEP Resources Inc. QEP Underperform $28.80 $28.00 -2.78% 177.8 $4,832 $7,718 $1.78 $1.33 $1.85 -- 16.2x 21.7x 15.6x --
Resolute Energy Corp. REN Neutral $8.61 NA NA 61.9 $526 $948 $0.45 $0.15 $0.14 -- 19.1x 57.4x 61.5x --
Southwestern Energy Co. SWN Neutral $31.55 NA NA 349.1 $10,805 $7,903 $1.82 $1.22 $1.49 -- 17.3x 25.9x 21.2x --
Ultra Petroleum Corp. UPL Underperform $21.42 $20.00 -6.63% 152.9 $3,297 $4,870 $2.52 $1.45 $0.66 -- 8.5x 14.8x 32.5x --
Whiting Petroleum Corp. WLL Neutral $44.77 NA NA 117.6 $5,146 $6,046 $3.86 $3.56 $3.87 -- 11.6x 12.6x 11.6x --
Source: Company reports, FactSet, and Sterne Agee estimates
Tim Rezvan, CFA - trezvan@sterneagee.com - (212) 338-4736
Page 13
August 26, 2012
Sterne Agee Energy and Industrials Coverage Universe
Energy: Oilfield Services & Equipment
Price Price Upside Shares Mkt Cap Assets Fiscal Yr. EPS P/E
Company Name Symbol Rating 8/25/2012 Target to PT Out. (mm) (mm) 2011A 2012E 2013E 2014E 2011A 2012E 2013E 2014E
Baker Hughes, Inc. BHI Buy $47.51 $50.00 5.24% 438.5 $20,762 $24,847 $4.20 $3.70 $4.80 -- 11.3x 12.8x 9.9x --
Cameron International Corp. CAM Buy $53.71 $62.00 15.43% 246.3 $13,289 $9,362 $2.66 $3.25 $4.30 -- 20.2x 16.5x 12.5x --
Core Laboratories N.V. CLB Neutral $121.79 NA NA 47.3 $5,718 $605 $3.74 $4.70 $5.25 -- 32.6x 25.9x 23.2x --
Dril-Quip Inc. DRQ Neutral $71.35 NA NA 40.4 $2,954 $1,086 $2.36 $2.95 $3.75 -- 30.2x 24.2x 19.0x --
FMC Technologies FTI Neutral $47.21 NA NA 238.4 $11,321 $4,271 $1.62 $2.10 $2.65 -- 29.1x 22.5x 17.8x --
Halliburton Company HAL Buy $34.27 $46.00 34.23% 923.0 $31,522 $23,677 $3.36 $3.35 $3.75 -- 10.2x 10.2x 9.1x --
National Oilwell Varco NOV Buy $77.03 $89.00 15.54% 426.4 $32,971 $25,515 $4.75 $5.95 $6.75 -- 16.2x 12.9x 11.4x --
NewPark Resources Inc. NR Neutral $7.13 NA NA 88.1 $633 $887 $0.79 $0.70 $0.95 -- 9.0x 10.2x 7.5x --
Oceaneering International Inc. OII Neutral $54.87 NA NA 107.9 $5,958 $2,400 $2.05 $2.60 $3.05 -- 26.8x 21.1x 18.0x --
Oil States International Inc. OIS Buy $78.91 $100.00 26.73% 54.7 $4,246 $3,704 $5.86 $8.15 $8.80 -- 13.5x 9.7x 9.0x --
Schlumberger Ltd. SLB Buy $74.59 $89.00 19.32% 1327.0 $98,452 $55,201 $3.66 $4.35 $5.35 -- 20.4x 17.1x 13.9x --
Superior Energy Services SPN Buy $22.14 $25.00 12.92% 157.5 $3,460 $4,184 $2.18 $2.75 $2.75 -- 10.2x 8.1x 8.1x --
Tenaris S.S. ADS TS Neutral $41.47 NA NA 590.3 $24,366 $15,098 $2.19 $3.15 $3.75 -- 18.9x 13.2x 11.1x --
Tetra Technologies Inc. TTI Neutral $6.83 NA NA 78.0 $531 $1,203 $0.58 $0.60 $0.90 -- 11.8x 11.4x 7.6x --
Weatherford International Ltd. WFT Buy $12.76 $18.00 41.07% 759.6 $9,662 $21,185 $0.82 $1.10 $1.50 -- 15.6x 11.6x 8.5x --
Source: Company reports, FactSet, and Sterne Agee estimates
Stephen D. Gengaro - sgengaro@sterneagee.com - (646) 376-5331
Grant Fox - gfox@sterneagee.com - (212) 338-4723
Page 14
August 26, 2012
Sterne Agee Energy and Industrials Coverage Universe
Industrials: Aerospace & Defense
Price Price Upside Shares Mkt Cap Assets Fiscal Yr. EPS P/E
Company Name Symbol Rating 8/25/2012 Target to PT Out. (mm) (mm) 2011A 2012E 2013E 2014E 2011A 2012E 2013E 2014E
AeroViroment Inc. AVAV Underperform $23.74 $20.00 -15.75% 22.3 $520 $369 $1.17 $1.36 $1.35 $1.25 20.3x 17.5x 17.6x 19.0x
BE Aerospace Inc. BEAV Buy $39.03 $58.00 48.60% 104.0 $4,055 $3,837 $2.24 $2.80 $3.35 $4.05 17.4x 13.9x 11.7x 9.6x
Bombardier Inc. BBD/B CN Neutral $3.67 NA NA 1780.9 $6,362 $0.47 $0.45 $0.50 $0.55 7.8x 8.2x 7.3x 6.7x
FLIR Systems Inc. FLIR Neutral $19.86 NA NA 151.1 $3,004 $2,147 $1.38 $1.40 $1.60 $1.85 14.4x 14.2x 12.4x 10.7x
General Dynamics Corp. GD Buy $66.09 $82.00 24.07% 352.8 $23,146 $34,883 $6.94 $7.05 $7.65 $8.15 9.5x 9.4x 8.6x 8.1x
Honeywell International HON Buy $58.36 $69.00 18.23% 780.6 $45,648 $39,808 $4.07 $4.60 $5.35 $6.30 14.3x 12.7x 10.9x 9.3x
Lockheed Martin Corp. LMT Neutral $92.45 NA NA 324.4 $29,911 $37,908 $7.82 $8.10 $8.35 $9.45 11.8x 11.4x 11.1x 9.8x
Mercury Computer Systems Inc. MRCY Buy $9.43 $14.00 48.46% 31.0 $294 $386 $0.71 $0.75 $0.50 $1.05 13.3x 12.6x 18.9x 9.0x
Precision Castparts Corp. PCP Buy $164.85 $190.00 15.26% 145.3 $23,497 $10,559 $7.02 $8.44 $10.15 $11.85 23.5x 19.5x 16.2x 13.9x
Raytheon Co. RTN Neutral $55.80 NA NA 332.0 $18,487 $25,854 $5.29 $5.45 $5.70 $5.90 10.5x 10.2x 9.8x 9.5x
Rockwell Collins Inc. COL Neutral $49.41 NA NA 142.2 $7,020 $5,389 $3.95 $4.40 $4.60 $4.80 12.5x 11.2x 10.7x 10.3x
Spirit AeroSystems Holdings Inc. SPR Buy $25.35 $34.00 34.12% 119.5 $2,976 $5,042 $1.36 $1.90 $2.70 $3.10 18.6x 13.3x 9.4x 8.2x
The Boeing Company BA Buy $71.09 $87.00 22.38% 751.8 $52,896 $79,986 $5.32 $4.80 $5.50 $7.45 13.4x 14.8x 12.9x 9.5x
Triumph Group Inc. TGI Buy $59.41 $77.00 29.61% 49.9 $2,970 $4,555 $3.85 $4.97 $5.75 $6.75 15.4x 12.0x 10.3x 8.8x
United Technologies Corp. UTX Buy $80.08 $99.00 23.63% 911.8 $72,214 $61,452 $5.30 $5.35 $6.75 $7.85 15.1x 15.0x 11.9x 10.2x
Source: Company reports, FactSet, and Sterne Agee estimates
Peter Arment - parment@sterneagee.com - (646) 376-5336
Josh W. Sullivan - jwsullivan@sterneagee.com - (646) 376-5337
Industrials: Aerospace & Defense
Price Price Upside Shares Mkt Cap Assets Fiscal Yr. EPS P/E
Company Name Symbol Rating 8/25/2012 Target to PT Out. (mm) (mm) 2011A 2012E 2013E 2014E 2011A 2012E 2013E 2014E
Carpenter Technology Corp. CRS Buy $49.05 $75.00 52.91% 52.6 $2,605 $2,628 $1.52 $2.88 $3.40 $5.00 32.3x 17.0x 14.4x 9.8x
Harris Corp. HRS Neutral $46.53 NA NA 113.8 $5,307 $5,593 $4.97 $5.20 $5.27 $5.30 9.4x 8.9x 8.8x 8.8x
KEYW Holding Corp. KEYW Buy $10.85 $14.00 29.03% 25.5 $281 $268 $0.02 $0.06 $0.27 -- -- -- 40.2x --
Source: Company reports, FactSet, and Sterne Agee estimates
Josh W. Sullivan - jwsullivan@sterneagee.com - (646) 376-5337
Peter Arment - parment@sterneagee.com - (646) 376-5336
Page 15
August 26, 2012
Sterne Agee Energy and Industrials Coverage Universe
Industrials: Auto, Auto Parts And Auto Retailers
Price Price Upside Shares Mkt Cap Assets Fiscal Yr. EPS P/E
Company Name Symbol Rating 8/25/2012 Target to PT Out. (mm) (mm) 2011A 2012E 2013E 2014E 2011A 2012E 2013E 2014E
AutoNation Inc. AN Neutral $40.52 $38.00 -6.22% 120.7 $4,806 $6,199 $1.93 $2.50 $2.75 $3.00 21.0x 16.2x 14.7x 13.5x
BorgWarner Inc. BWA Buy $68.43 $82.00 19.83% 114.4 $7,901 $5,959 $4.47 $5.15 $5.80 $6.55 15.3x 13.3x 11.8x 10.4x
Delphi Automotive PLC DLPH Neutral $29.18 $30.00 2.81% 328.2 $9,562 $9,128 $2.78 $3.65 $3.90 -- 10.5x 8.0x 7.5x --
Ford Motor Co. F Buy $9.49 $15.00 58.06% 3743.1 $35,373 $178,348 $1.51 $1.35 $1.75 $1.90 6.3x 7.0x 5.4x 5.0x
General Motors Co. GM Buy $21.18 $30.00 41.64% 1566.0 $33,418 $144,603 $3.86 $3.45 $3.85 $4.50 5.5x 6.1x 5.5x 4.7x
Group 1 Automotive Inc. GPI Buy $52.63 $69.00 31.10% 22.8 $1,184 $2,476 $3.62 $4.60 $5.10 $5.60 14.5x 11.4x 10.3x 9.4x
Johnson Controls Inc. JCI Neutral $26.98 $28.00 3.78% 683.9 $18,404 $29,676 $2.41 $2.50 $2.70 $3.00 11.2x 10.8x 10.0x 9.0x
Lear Corp. LEA Neutral $39.78 $44.00 10.61% 98.0 $3,944 $7,011 $5.34 $5.10 $5.30 $5.75 7.4x 7.8x 7.5x 6.9x
Penske Automotive Group PAG Buy $25.75 $32.00 24.27% 90.3 $2,315 $4,502 $1.80 $2.15 $2.35 $2.50 14.3x 12.0x 11.0x 10.3x
TRW Automotive Holdings Corp. TRW Buy $41.82 $57.00 36.30% 122.0 $5,108 $10,262 $6.11 $5.85 $6.60 $7.40 6.8x 7.1x 6.3x 5.7x
Source: Company reports, FactSet, and Sterne Agee estimates
Michael Ward, CFA - mward@sterneagee.com - (646) 376-5375
Page 16
August 26, 2012
Sterne Agee Energy and Industrials Coverage Universe
Industrials: Coal, Metals & Mining, Engineering &
Construction
Price Price Upside Shares Mkt Cap Assets Fiscal Yr. EPS P/E
Company Name Symbol Rating 8/25/2012 Target to PT Out. (mm) (mm) 2011A 2012E 2013E 2014E 2011A 2012E 2013E 2014E
Agnico Eagle Mines AEM Neutral $47.39 NA NA 171.2 $8,095 $5,034 $1.94 $2.00 $2.15 -- 24.4x 23.7x 22.0x --
Alpha Natural Resources ANR Buy $6.40 $16.00 1.50 220.4 $1,452 $16,511 $1.88 ($1.35) ($1.25) -- 3.4x -- -- --
Arch Coal ACI Buy $6.58 $15.00 1.28 212.3 $1,435 $10,214 $1.19 ($0.35) ($0.25) -- 5.5x -- -- --
Barrick Gold ABX Neutral $37.78 NA NA 1000.6 $38,062 $48,884 $4.66 $4.00 $4.75 -- 8.1x 9.4x 8.0x --
Chicago Bridge and Iron Company CBI Buy $37.50 $56.00 0.49 96.7 $3,619 $3,292 $2.55 $3.05 $3.50 -- 14.7x 12.3x 10.7x --
Coeur d'Alene Mines CDE Buy $22.23 $24.00 0.08 89.9 $1,975 $3,264 $2.60 $1.95 $2.85 -- 8.6x 11.4x 7.8x --
Consol Energy CNX Buy $32.88 $60.00 0.82 227.6 $7,510 $12,526 $3.04 $1.50 $2.50 -- 10.8x 21.9x 13.2x --
Fluor Corporation FLR Buy $53.07 $75.00 0.41 167.0 $8,884 $8,270 $3.44 $3.75 $4.20 $4.65 15.4x 14.2x 12.6x 11.4x
Foster Wheeler AG FWLT Neutral $21.00 NA NA 107.9 $2,276 $2,607 $1.43 $1.60 $2.00 $2.35 14.7x 13.1x 10.5x 8.9x
Gold Resource Corporation GORO Buy $18.47 $32.00 0.73 52.8 $959 $120 $1.06 $0.85 $1.50 -- 17.4x 21.7x 12.3x --
Granite Construction, Inc. GVA Underperform $27.77 $25.00 (0.10) 38.7 $1,064 $1,548 $1.33 $1.15 $1.85 $2.20 20.9x 24.1x 15.0x 12.6x
Hecla Mining HL Neutral $5.37 NA NA 285.5 $1,539 $1,396 $0.47 $0.22 $0.50 -- 11.4x 24.4x 10.7x --
Jacobs Engineering Group, Inc. JEC Buy $40.40 $55.00 0.36 129.7 $5,258 $6,049 $2.65 $2.90 $3.40 $3.75 15.2x 13.9x 11.9x 10.8x
James River Coal JRCC Buy $2.83 $8.00 1.83 35.9 $106 $1,405 $0.06 ($3.00) ($3.35) -- 47.2x -- -- --
KBR, Inc. KBR Neutral $27.05 NA NA 147.3 $4,019 $5,673 $2.67 $2.70 $3.05 -- 10.1x 10.0x 8.9x --
Newmont Mining NEM Buy $49.23 $65.00 0.32 491.2 $24,091 $27,474 $4.34 $4.00 $5.00 -- 11.3x 12.3x 9.8x --
North American Energy Partners NOA Buy $2.70 $5.00 0.85 36.3 $99 $750 ($0.32) ($0.58) ($0.16) $0.30 -- -- -- 9.0x
Pan American Silver PAAS Neutral $17.27 NA NA 153.9 $2,658 $1,952 $2.63 $1.35 $1.85 -- 6.6x 12.8x 9.3x --
Peabody Energy BTU Buy $23.37 $45.00 0.93 268.3 $6,153 $16,733 $3.70 $2.00 $3.25 -- 6.3x 11.7x 7.2x --
URS Corporation URS Buy $37.66 $56.00 0.49 76.9 $2,849 $6,863 $3.53 $4.20 $4.80 $5.25 10.7x 9.0x 7.8x 7.2x
Walter Energy WLT Neutral $35.49 NA NA 62.5 $2,236 $6,812 $6.64 $3.15 $6.00 -- 5.3x 11.3x 5.9x --
Source: Company reports, FactSet, and Sterne Agee estimates
Michael S. Dudas, CFA - mdudas@sterneagee.com - (646) 376-5329
Patrick Uotila, CPA - puotila@sterneagee.com - (646) 376-5358
Satyadeep Jain - sjain@sterneagee.com - (646) 376-5357
Page 17
August 26, 2012
Sterne Agee Energy and Industrials Coverage Universe
Industrials: Construction Materials & Diversified
Industrials
Price Price Upside Shares Mkt Cap Assets Fiscal Yr. EPS P/E
Company Name Symbol Rating 8/25/2012 Target to PT Out. (mm) (mm) 2011A 2012E 2013E 2014E 2011A 2012E 2013E 2014E
A.O. Smith Corp. AOS Neutral $53.65 NA NA 39.6 $2,115 $2,349 $2.09 $2.85 $3.31 $3.85 25.7x 18.8x 16.2x 13.9x
Albemarle Corp. ALB Buy $56.40 $70.00 0.24 89.5 $5,074 $3,204 $4.77 $4.76 $5.51 $6.08 11.8x 11.8x 10.2x 9.3x
AMCOL International Corp. ACO Buy $30.38 $36.00 0.19 31.9 $970 $843 $1.87 $2.15 $2.26 $2.57 16.2x 14.1x 13.4x 11.8x
Astec Industries, Inc. ASTE Buy $29.98 $35.00 0.17 22.8 $686 $717 $1.95 $1.93 $2.50 $2.71 15.4x 15.5x 12.0x 11.1x
CEMEX S.A. B de C.V. CX Neutral $8.09 NA NA 1059.8 $8,447 $39,291 ($1.47) ($0.39) ($0.11) $0.16 -- -- -- 50.6x
Eagle Materials, Inc. EXP Neutral $42.82 NA NA 45.4 $1,910 $985 $0.50 $0.61 $1.66 $2.04 85.6x 70.2x 25.8x 21.0x
EnPro Industries, Inc. NPO Buy $37.18 $45.00 0.21 20.7 $770 $1,252 $2.07 $2.07 $2.79 $3.52 18.0x 18.0x 13.3x 10.6x
Martin Marietta Materials, Inc. MLM Buy $78.77 $90.00 0.14 45.8 $3,514 $3,148 $1.88 $2.43 $3.51 $4.74 41.9x 32.4x 22.4x 16.6x
Mueller Water Products, Inc. MWA Neutral $3.96 NA NA 156.8 $621 $1,569 ($0.17) $0.02 $0.16 $0.26 -- -- 24.8x 15.2x
NewMarket Corp. NEU Neutral $246.67 NA NA 13.4 $3,284 $1,192 $14.14 $18.07 $18.43 $20.37 17.4x 13.7x 13.4x 12.1x
Prospect Global Resources PGRX Buy $2.69 $5.00 0.86 55.3 $149 $26 -- ($2.24) ($0.20) ($0.25) -- -- -- --
Texas Industries, Inc. TXI Underperform $41.32 $32.00 (0.23) 28.0 $1,150 $1,577 ($1.93) ($1.69) ($0.71) ($1.44) -- -- -- --
USG Corp. USG Neutral $20.61 NA NA 107.3 $2,137 $3,719 ($3.03) ($0.92) ($0.44) $0.62 -- -- -- 33.2x
Vulcan Materials Co. VMC Neutral $41.07 NA NA 129.4 $5,123 $8,229 ($0.87) ($0.29) $0.39 $0.98 -- -- -- 41.9x
Watts Water Technologies. WTS Neutral $37.32 NA NA 27.8 $1,038 $1,698 $2.18 $2.02 $2.44 $2.91 17.1x 18.5x 15.3x 12.8x
Source: Company reports, FactSet, and Sterne Agee estimates
Todd Vencil, CFA - tvencil@sterneagee.com - (804) 282-7385
Kevin Bennett, CFA - kbennett@sterneagee.com - (804) 282-4506
Page 18
August 26, 2012
APPENDIX SECTION
IMPORTANT DISCLOSURES:
Regulation Analyst Certification:
I, Peter Arment, Michael S. Dudas, Stephen D. Gengaro, Jeffrey A. Kauffman, Michael Ward, Tim Rezvan, Todd Vencil, Kevin Bennett,
Grant Fox, Satyadeep Jain, Ryan Mueller, Josh W. Sullivan, Patrick Uotila and Sal Vitale, hereby certify the views expressed in this
research report accurately reflect my personal views about the subject security(ies) or issuer(s). I further certify that no part of my
compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by me in this report.
Research Disclosures:
Sterne, Agee & Leach, Inc. makes a market in the following subject companies The Boeing Company, Baker Hughes, Inc., Chicago
Bridge and Iron Company, CEMEX S.A. B de C.V., Dril-Quip Inc., Eagle Materials, Inc., Ford Motor Co., Fluor Corporation, Foster
Wheeler AG, General Motors Co., Granite Construction, Inc., Jacobs Engineering Group, Inc., KBR, Inc., North American Energy
Partners, QEP Resources Inc., Schlumberger Ltd., Ultra Petroleum Corp., URS Corporation and USG Corp..
Sterne, Agee & Leach, Inc.'s research analysts receive compensation that is based upon various factors, including Sterne, Agee & Leach,
Inc.'s total revenues, a portion of which is generated by investment banking activities.
Sterne Agee & Leach, Inc. expects to receive or intends to seek compensation for investment banking services from the subject company
and/or companies in the next three months.
Price Target Risks & Related Risk Factors:
Investment risks associated with the achievement of the price target include, but are not limited to, a company's failure to achieve
Sterne, Agee & Leach, Inc., earnings and revenue estimates; unforeseen macroeconomic and/or industry events that adversely affect
demand for a company's products or services; product obsolescence; changes in investor sentiment regarding the specific company or
industry; intense and rapidly changing competitive pressures; the continuing development of industry standards; the company's ability
to recruit and retain competent personnel; and adverse market conditions. For a complete discussion of the risk factors that could
affect the market price of a company's shares, refer to the most recent Form 10-Q or 10-K that a company has filed with the Securities
Exchange Commission.
Valuation Methodology:
Methodology for assigning ratings and target prices includes qualitative and quantitative factors including an assessment of industry
size, structure, business trends and overall attractiveness; management effectiveness; competition; visibility; financial condition; and
expected total return, among other factors. These factors are subject to change depending on overall economic conditions or industry
or company-specific occurrences. Sterne, Agee & Leach, Inc., analysts base valuations on a combination of forward looking earnings
multiples, price-to-revenue multiples, and enterprise-value-to-revenue ratios. Sterne, Agee & Leach, Inc., believes this accurately reflects
the strong absolute value of earnings, the strong earnings growth rate, the inherent profitability, and adjusted balance sheet factors.
Additional company-specific valuation methodology is available through Sterne, Agee & Leach, Inc.
Definition of Investment Ratings:
BUY: We expect this stock to outperform the industry over the next 12 months.
NEUTRAL: We expect this stock to perform in line with the industry over the next 12 months.
UNDERPERFORM: We expect this stock to underperform the industry over the next 12 months.
RESTRICTED: Restricted list requirements preclude comment.
Ratings Distribution:
IB Serv./ Past 12Mos.
Rating Category Count Percent Count Percent
Buy 228 48.72% 14 6.14%
Neutral 217 46.37% 9 4.15%
Underperform 23 4.91% 0 0.00%
ADDITIONAL INFORMATION AVAILABLE UPON REQUEST: Contact Robert Hoehn at 1-212-338-4731.
Other Disclosures:
Appendix Section, Page I
August 26, 2012
Opinions expressed are our present opinions only. This material is based upon information that we consider reliable, but we do not
represent that it is accurate or complete, and it should not be relied upon as such. Sterne, Agee & Leach, Inc., its affiliates, or one or
more of its officers, employees, or consultants may, at times, have long or short or options positions in the securities mentioned herein
and may act as principal or agent to buy or sell such securities.
Copyright © 2012 Sterne, Agee & Leach, Inc. All Rights Reserved.
To receive price charts or other disclosures on the companies mentioned in this report, please visit our website at https://
sterneagee.bluematrix.com/sellside/Disclosures.action or contact Sterne, Agee & Leach, Inc. toll-free at (800) 240-1438 or
(205) 949-3689.
Appendix Section, Page II
Founded in 1901, Sterne Agee has been providing investors like you with high-quality investment opportunities for over a century. During the
early years, our founders prominently established themselves in the financial securities industry in the southeastern United States. Today, we
have expanded to serve all regions of the country. Sterne, Agee is headquartered in Birmingham, Alabama with offices in 22 states. Sterne
Agee is one of the largest independent firms in the country. Sterne, Agee & Leach, Inc. is a division of Sterne Agee Group, Inc., which also
includes The Trust Company of Sterne, Agee & Leach, Inc.; Sterne Agee Asset Management, Inc.; Sterne Agee Clearing, Inc.; and Sterne Agee
Financial Services, Inc.—www.sterneagee.com
EQUITY CAPITAL MARKETS
Ryan Medo Managing Dir., Eq. Cap. Mkts. (205) 949-3623
INSTITUTIONAL SALES INSTITUTIONAL TRADING
William Jump Director of Institutional Sales (404) 814-3960 JT Cacciabaudo Head of Trading (212) 763-8288
Jon Schenk Assoc. Director of Inst. Sales (212) 763-8221
EQUITY RESEARCH
Robert Hoehn Director of Research (212) 338-4731
CONSUMER FINANCIAL SERVICES (CONT.)
Apparel Retailing & Toys Property/Casualty Insurance
Margaret Whitfield SVP, Sr. Analyst (973) 519-1019 Dan Farrell Mng. Dir. (212) 338-4782
Tom Nikic, CFA Analyst (212) 338-4784 Nitin Chhabra, FCAS Analyst (212) 338-4779
Interactive Entertainment / Internet INDUSTRIALS
Arvind Bhatia, CFA Mng. Dir. (214) 702-4001 Aerospace & Defense
Brett Strauser VP, Analyst (214) 702-4009 Peter Arment Mng. Dir. (646) 376-5336
Footwear & Apparel Josh W. Sullivan Sr. Analyst (646) 376-5337
Sam Poser Mng. Dir. (212) 763-8226
Ben Shamsian Analyst (212) 338-4721 Auto, Auto Parts and Auto Retailers
Michael P. Ward, CFA Mng. Dir. (646) 376-5375
Leisure & Entertainment
David Bain Mng. Dir. (949) 721-6651 Coal, Metals & Mining, Engineering & Construction
Michael S. Dudas, CFA Mng. Dir. (646) 376-5329
Restaurants Satyadeep Jain Analyst (646) 376-5357
Lynne Collier Mng. Dir. (214) 702-4045 Patrick Uotila, CPA Analyst (646) 376-5358
ENERGY Construction Materials & Diversified Industrials
Exploration & Production Todd Vencil, CFA SVP, Sr. Analyst (804) 282-7385
Tim Rezvan, CFA Sr. Analyst (212) 338-4736 Kevin Bennett, CFA Analyst (804) 282-4506
Oilfield Services & Equipment HEALTHCARE
Stephen D. Gengaro Mng. Dir. (646) 376-5331 Pharmaceutical Services
Grant Fox Analyst (212) 338-4723
Greg T. Bolan Mng. Dir. (615) 760-1469
FINANCIAL SERVICES Himanshu Rastogi, PhD, CFA VP, Analyst (615) 760-1478
Asset Management TECHNOLOGY
Jason Weyeneth, CFA SVP, Sr. Analyst (212) 763-8293
Charles Warren VP, Analyst (646) 376-5309
Data Networking and Storage
Alex Kurtz Mng. Dir (415) 402-6015
Amelia Harris Analyst (415) 402-6018
Banks & Thrifts
Matthew Kelley Mng. Dir. (207) 699-5800 Financial Technology
Matthew Breese Analyst (207) 699-5800 Greg Smith Mng. Dir (818) 615-2029
Brett Rabatin, CFA Mng. Dir. (877) 457-8625 Jennifer Dugan Analyst (415) 402-6051
Kenneth James VP, Sr. Analyst (615) 760-1474
Peyton Green Mng. Dir. (877) 492-2663 Hardware, Mobile Devices, IT Supply Chain
Zachary Wollam VP, Analyst (615) 760-1468 Shaw Wu SVP, Sr. Analyst (415) 362-7431
Todd L. Hagerman Mng. Dir. (212) 338-4744
Robert Greene VP, Analyst (212) 763-8296 LED Supply Chain
Andrew Huang Mng. Dir. (415) 362-6143
Life Insurance
John M. Nadel Mng. Dir. (212) 338-4717 Semiconductors
Alex Levine Analyst (212) 338-4748 Vijay Rakesh Mng. Dir. (312) 525-8431
Mortgage Finance & Specialty Finance TRANSPORTATION, SERVICES & EQUIPMENT
Henry J. Coffey, Jr., CFA Mng. Dir. (615) 760-1472
Jeffrey A. Kauffman Mng. Dir. (212) 338-4765
Jason Weaver VP, Sr. Analyst (615) 760-1475
Sal Vitale VP, Sr. Analyst (212) 338-4766
Calvin Hotrum Analyst (615) 760-1476
Ryan Mueller Analyst (212) 338-4732
Email Address for Sterne Agee Employees: first initial + last name@sterneagee.com (e.g., jsmith@sterneagee.com)
