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Building Products IndustryQ3 2017

• The Macroeconomic Picture• Building Products Industry Update• Hurricane Season• Mergers & Acquisitions• Cherry Tree Building Products Index

Inside this report:

Cherry Tree Research | Building Products Industry Report

Sources: Federal Reserve Bank of St. Louis, Capital IQ, Bureau of Economic Analysis, Wall Street Journal, Reuters

S&P 500 CONSUMER CONFIDENCE

U.S. INTEREST RATES UNEMPLOYMENT RATE & JOB GROWTH

Figures in thousands

The U.S. economy’s strong performance continued into the third quarter of 2017. During the quarter, the S&P

500 achieved record highs, and closed above 2,500 for the first time on September 15. Consumer confidence

remained steady, and interest rates stayed largely unchanged. One area that experienced a slight drop off was the

employment data. While the unemployment rate dropped to 4.2%, the lowest level since 2001, total payrolls fell

by 33,000 in the third quarter, the first loss in seven years. Many economists attribute this paradoxical loss of

payroll in spite of a falling unemployment rate to the recent hurricanes that hit the U.S., as nearly 1.5 million

people reported that they had a job but could not work in September due to bad weather. As such, these

economists do not interpret the payroll numbers to be a negative signal for the economy going forward.

SUMMARY

The Macroeconomic Picture

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500

1,000

1,500

2,000

2,500

3,000

Sep-07 Sep-09 Sep-11 Sep-13 Sep-15 Sep-170

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40

60

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120

140


0.0%

2.0%

4.0%

6.0%

8.0%


Federal Funds Rate

10-Year Treasury Rate

30-Year Conventional Mortgage Rate

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

-50

0

50

100

150

200

250

300

350

400


Payrolls Added Unemployment Rate

2


Sources: Capital IQ, Cherry Tree & Associates Research

EQUITY PERFORMANCE HISTORICAL MEDIAN ENTERPRISE VALUE/EBITDA

Building products M&A activity increased slightly in the third quarter of 2017. There were a total of 56

transactions, as opposed to the 52 that occurred in the second quarter. The third quarter included two very large

acquisitions. CRH’s purchase of Ash Grove Cement Company for $3.5 billion was by far the biggest building

products transaction of the year so far. The acquisition of Oldcastle Distribution by Beacon Roofing Supply for

$2.6 billion was also larger than any transaction in the first two quarters. Several other transactions also surpassed

the $100 million mark, as West Fraser acquired Gilman Companies for $430 million, and U.S. Concrete bought

Polaris Materials for $230 million. Overall, there were more than $7 billion worth of disclosed transactions in the

third quarter of 2017, a notable increase from the $6.1 billion that occurred in the previous quarter. This marks

the third straight quarter that the dollar amount of building products M&A transactions has increased.

INDUSTRY UPDATE

Building Products Industry Update

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140 Cherry Tree Building Products Index

S&P 500

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

3

Hurricane Season

4Cherry Tree Research | Building Products Industry Report

The 2017 hurricane season is set to be one of the most destructive in U.S. history. Hurricanes Harvey, Irma, and

Maria marked the first time that three Category 4 Atlantic hurricanes made landfall in the U.S. during the same year.

While each storm fell into the same category, each inflicted its damage in a different way. The destruction caused by

Hurricane Harvey was mostly due to flooding, as it dumped 27 trillion gallons of water on Texas and Louisiana –

enough to fill the Houston Astrodome 85,000 times. The damage created by Hurricane Irma, on the other hand, was

largely caused by intense winds, which reached 185 m.p.h. at its peak. Hurricane Maria’s damage in Puerto Rico

was caused by a combination of heavy winds and flooding.

Sources: Weather.com, Slate, CNN, NPR, AccuWeather, ABC News, CNBC, DemandBuilder® from Principia, Bloomberg

ESTIMATED DAMAGES

ESTIMATED BUILDING PRODUCTS REPLACEMENT DEMAND

$6,580

$3,502

$2,096 $2,082 $2,048 $1,623

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

Lumber Windows Roofing Insulation Siding Wallboard

$ per Housing Unit

Combined, Hurricanes Harvey, Irma, and Maria are

estimated to have caused $173 billion of damage

according to Bloomberg. Of this estimate, $85 billion is

attributed to Hurricane Harvey, which would make the

hurricane that hit Houston one of the costliest natural

disasters in U.S. history. Hurricane Irma is estimated to

have caused $58 billion in damage, while Hurricane

Maria accounted for an estimated $30 billion. These costs

include property damage, disruptions to business,

increased unemployment, and crop losses.

At a national level, these costs are expected to have a

substantial negative effect on the U.S.’s GDP. After

Hurricanes Harvey and Irma, Goldman Sachs reduced its

third quarter GDP growth forecast from 2.8% to 2.0%.

Other economists also lowered their estimates

significantly.

One particular sector of the economy that may benefit

from the repair efforts is the building products industry. As

efforts to repair the damage in Texas, Florida, and Puerto

Rico continue, demand for building products will

continue to rise. Principia Consulting estimates that each

housing unit in the Houston area will require an averageof $18,000 of building materials for repairs. At over $6,500 per home, lumber is projected to be the biggest repair

expense among building products materials. Window, roofing, insulation, siding, and wallboard replacements will

also be significant.

While the hurricane repair efforts should boost the building products industry, it is not entirely clear when these

effects will be realized. Hurdles such as the limited availability of materials and labor shortages, as well as the time it

takes homeowners to go through the insurance process, could delay the potential benefits to the building products

industry. According to CNBC, following the last six major storms to hit the United States since 2004, building

products stocks rose an average of 10.3% in the ensuing 18 months. Thus, while companies in the building products

industry must be patient, they should benefit from the repair efforts over time.

$24

$27

$30

$35

$48

$58

$70

$85

$160

Hurricane Wilma (2005)

Hurricane Ivan (2004)

Hurricane Maria (2017)

Hurricane Ike (2008)

Hurricane Andrew (1992)

Hurricane Irma (2017)

Superstorm Sandy (2012)

Hurricane Harvey (2017)

Hurricane Katrina (2005)

Figures in billions

Announced Enterprise Enterprise Value/

Date Acquirer Target Target Description Value Revenue EBITDA

09/28/2017 Binderholz GmbH Klenk Holz AG Germany-based lumber products mfg. - - -

09/25/2017 Beacon Communities LLC National Development Corporation Pennsylvania real estate developer - - -

09/25/2017 Lifeway Mobility, LLC Sugar Hill Building & Design, LLC Special needs bathroom products mfg. - - -

09/22/2017 U.S. Concrete, Inc. Polaris Materials CorporationCanada-based aggregates manufacturer $230.0 5.0x 99.8x

09/22/2017 Cardinal Glass Industries, Inc.PGT Innovations, Inc., Door Glass Processing Assets

Impact-resistant windows and doorsmanufacturer $28.0 - -

09/20/2017 CRH plc Ash Grove Cement Company Cement manufacturer $3,500.0 - -

09/18/2017 Sun Capital Partners, Inc. Axia Acquisition Corporation Hardware-related products distributor - - -

09/14/2017 U.S. LUMBER GROUP, LLC NILCO, LLC Lumber products manufacturer - - -

09/13/2017 Bird Construction Inc. Stack Modular Structures Ltd. Canada-based modular buildings mfg. - - -

09/13/2017 Bird Construction Inc. Stack Modular Structures Hong Kong Ltd.Hong Kong-based modular buildings mfg. - - -

09/13/2017 Trimlite Mfg. Inc. Codel Entry Systems, Inc. Fiberglass door manufacturer - - -

09/11/2017 Artisan Design Group, Inc. JR McDade Company, LLC Floor products manufacturer - - -

09/11/2017 Artisan Design Group, Inc. WCCV Floor Coverings, LLC Floor products manufacturer - - -

09/11/2017 Artisan Design Group, Inc. Arlun, Inc. Floor products manufacturer - - -

09/08/2017China National Building Materials Group Corporation

China National Materials Company Limited

Chinese cement equipment supplier - - -

09/07/2017 Wilsonart LLC KML Corporation Decorative surfaces and panels mfg. - - -

09/05/2017CanWel Building Materials Group Ltd.

Honsador Holding, LLCBuilding products and electrical supplies distributor $82.3 - -

09/05/2017 Dimora Brands, Inc. Du Verre Hardware Company Canada-based cabinetry products mfg. - - -

08/31/2017 JELD-WEN Holding, Inc. Kolder Pty. Limited Bathroom cabinetry and products mfg. - - -

08/31/2017 MC Endeavors, Inc.MC Endeavors, Inc., Prior to Reverse Merger with Room 21 Media Inc.

Smart-home developer - - -

08/25/2017 JELD-WEN Holding, Inc. Milliken Millwork, Inc. Door supplier - - -

08/25/2017 Tecta America Corp. CE Reeve Roofing LLC Roofing services provider - - -

08/25/2017 Homeeasy Industrial Co., Ltd. Emerson Quiet Kool Ltd Air condintioner manufacturer - - -

08/24/2017 Beacon Roofing Supply, Inc. Oldcastle Distribution Inc. Building products distributor $2,625.0 - -

08/22/2017 Tecta America Corp. Tecta America Oklahoma LLC Roofing services provider - - -

08/21/2017Gebrüder Dorfner GmbH & Co. Kaolin-und Kristallquarzsand-Werke KG

ACS International Products LP Raw materials supplier - - -

08/18/2017 Kingspan Group plc CPI Daylighting Inc. Daylighting systems manufacturer $46.9 - -

08/15/2017Service Experts Heating & Air Conditioning, LLC

Aramendia Plumbing, Heating & Air Ltd. Plumbing and HVAC services provider $24.0 - -



$ in millions

5

Mergers and Acquisitions: 2017-Q3



$ in millions

6

Announced Enterprise Enterprise Value/

Date Acquirer Target Target Description Value Revenue EBITDA

08/15/2017 Quantum Construction Company Seminole Masonry LLCMasonry and precast concrete products manufacturer - - -

08/07/2017 SiteOne Landscape Supply, Inc. South Coast Supply Inc.Landscaping and masonry building materials distributor - - -

08/02/2017 Woodlawn Partners BW Manufacturing, Inc. Flooring equipment manufacturer - - -

08/02/2017 Summit Materials, Inc. Great Southern Ready Mix, LLC Ready-mix concrete manufacturer - - -

08/02/2017 Summit Materials, Inc. Northwest Ready Mix Inc. Ready-mix concrete manufacturer - - -

08/02/2017 Anvil International, LLC Grinnell Mechanical Product Suite Plumbing materials manufacturer - - -

08/02/2017 Anvil International, LLC Anniston, Alabama Foundry Plumbing materials manufacturer - - -

08/01/2017 Ariston Thermo Group SpA Heat Transfer Products, Inc. Heating systems manufacturer - - -

07/31/2017 Sunrise Windows & Doors, Ltd. Paragon Door Designs, Inc. Door manufacturer - - -

07/28/2017 Eagle Materials Inc. Wildcat Minerals LLCFrac sands and ceramic proppants distributor $37.0 - -

07/28/2017 SBS Industries, LLC Mathey Investments, Inc. Pipe cutting tools manufacturer - - -

07/27/2017 ACG Materials Diamond Gypsum LLC Gypsum products manufacturer - - -

07/26/2017 West Fraser, Inc. Gilman Companies Sawmill operator $430.0 - -

07/20/2017 Ironbridge Equity Partners LimitedArmtec LP, Ottawa Operations and Brooklin Operations

Canada-based precast concrete products manufacturer - - -

07/20/2017 GVS S.p.A. GVS Filtration Inc. Filtration products manufacturer - - -

07/19/2017 Charlotte Pipe and Foundry CompanyRocky Mountain Colby Pipe Company, Two Plants in Denver

Plumbing products manufacturer - - -

07/14/2017 dormakaba Holding AG Skyfold Inc. Vertical folding wall manufacturer $86.1 2.6x 8.5x

07/12/2017 United Process, Inc. Proudfoot Company, Inc.Architectural acoustic products manufacturer - - -

07/11/2017 Horizon Services, Inc. Casteel Heating and Cooling, Inc. HVAC and plumbing services provider - - -

07/11/2017 Horizon Services, Inc. Gold Medal Service HVAC and plumbing services provider - - -

07/10/2017 Clayton Properties Harris Doyle Homes, Inc. Alabama-based homebuilder - - -

07/10/2017 WILsquare Capital LLC Walcro, Inc. Flooring tools distributor - - -

07/07/2017 - Welsh Construction, LLCCommercial construction services provider - - -

07/06/2017 Clayton Properties Oakwood Homes LLC Homebuilder in Colorado and Utah - - -

07/05/2017Carlisle Construction Materials Incorporated

Drexel Metals Inc.Metal roofing systems and equipment manufacturer - - -

07/05/2017 Foundation Building Materials, Inc. Ceiling and Wall Supply, Inc. Acoustical ceiling products distributor - - -

Mergers and Acquisitions: 2017–Q3 (continued)



As of October 1, 2017

($ in millions) Market Enterprise LTM LTM LTM Gross EBITDA Enterprise Value/ 3-Yr Rev

Company Cap Value Revenue Gross Profit EBITDA Margin Margin Revenue EBITDA Growth

Cherry Tree Building Products Index $3,456.0 $4,354.5 $3,240.1 $779.7 $375.2 25.4% 12.2% 1.3x 11.1x 10.8%

Median Summary

Distributors $1,345.0 $1,678.5 $2,411.5 $541.1 $168.8 24.1% 5.7% 0.6x 11.5x 7.5%

Homebuilders $4,036.8 $7,791.7 $5,642.6 $1,100.1 $534.4 19.5% 9.5% 1.2x 12.1x 17.5%

HVAC $15,084.4 $17,062.5 $8,819.2 $2,721.6 $1,266.8 30.7% 14.9% 2.1x 14.3x 4.8%

Roofing, Siding & Insulation $5,868.9 $6,037.8 $2,840.1 $897.6 $458.1 27.4% 17.4% 2.1x 11.8x 4.8%

Windows & Doors $797.3 $1,045.9 $883.6 $248.6 $116.8 23.7% 11.4% 1.3x 11.0x 13.2%

Plumbing & Cabinetry $8,737.3 $9,088.2 $5,135.9 $1,925.6 $712.2 35.4% 13.9% 1.6x 11.5x 10.4%

Floors & Surfaces $2,102.4 $2,440.0 $2,174.0 $609.8 $157.5 29.3% 9.9% 1.3x 11.5x 4.6%

Lumber & Wood Products $3,275.1 $3,557.2 $3,428.7 $645.3 $487.0 26.3% 18.1% 1.5x 8.0x 10.6%

Cement, Concrete & Aggregates $13,311.9 $16,368.3 $3,707.3 $1,034.8 $951.6 32.7% 20.0% 2.3x 12.3x 12.2%

Distributors

Beacon Roofing Supply, Inc. $3,468.7 $4,649.1 $4,261.2 $1,055.3 $373.8 24.8% 8.8% 1.1x 12.4x 23.1%

Bluelinx Holdings Inc. $94.0 $453.2 $1,800.3 $229.6 $36.0 12.8% 2.0% 0.3x 12.6x (4.3%)

BMC Stock Holdings, Inc. $1,429.6 $1,860.4 $3,212.9 $773.6 $186.3 24.1% 5.8% 0.6x 10.0x –

Boise Cascade Company $1,345.0 $1,678.5 $4,100.1 $539.0 $168.8 13.1% 4.1% 0.4x 9.9x 6.4%

Builders FirstSource, Inc. $2,026.4 $3,920.3 $6,669.2 $1,665.5 $367.2 25.0% 5.5% 0.6x 10.7x 62.8%

CanWel Building Materials Group Ltd. $340.8 $535.3 $795.2 $97.2 $40.7 12.2% 5.1% 0.7x 13.2x 12.3%

Foundation Building Materials, Inc. $606.1 $1,190.2 $1,886.4 $541.1 $108.4 28.7% 5.7% 0.6x 11.0x –

GMS Inc. $1,450.4 $2,033.5 $2,411.5 $785.9 $182.4 32.6% 7.6% 0.8x 11.1x –

Goodfellow Inc. $51.2 $119.2 $420.4 $55.4 ($10.3) 13.2% (2.5%) 0.3x – –

Hardwoods Distribution Inc. $345.3 $427.4 $775.0 $144.0 $44.4 18.6% 5.7% 0.6x 9.6x 32.2%

Huttig Building Products, Inc. $182.7 $286.1 $731.6 $154.7 $16.6 21.1% 2.3% 0.4x 17.2x 7.3%

Watsco, Inc. $5,262.9 $5,855.0 $4,302.9 $1,059.1 $376.6 24.6% 8.8% 1.4x 15.5x 3.8%

Ferguson plc $16,510.1 $18,281.2 $20,063.8 $5,812.0 $1,548.5 29.0% 7.7% 0.9x 11.8x 7.5%

25th Percentile $340.8 $453.2 $795.2 $154.7 $40.7 13.2% 4.1% 0.4x 10.5x 6.4%

Median $1,345.0 $1,678.5 $2,411.5 $541.1 $168.8 24.1% 5.7% 0.6x 11.5x 7.5%

75th Percentile $2,026.4 $3,920.3 $4,261.2 $1,055.3 $367.2 25.0% 7.6% 0.8x 12.7x 23.1%

Homebuilders

Beazer Homes USA, Inc. $599.1 $1,765.4 $1,875.4 $306.9 $74.4 16.4% 4.0% 0.9x 23.7x 11.4%

CalAtlantic Group, Inc. $4,036.8 $7,791.7 $6,673.6 $1,423.0 $792.6 21.3% 11.9% 1.2x 9.8x 44.9%

D.R. Horton, Inc. $14,945.1 $17,411.3 $13,673.1 $2,777.1 $1,642.8 20.3% 12.0% 1.3x 10.6x 22.6%

KB Home $2,063.4 $4,071.7 $4,157.3 $683.9 $268.9 16.4% 6.5% 1.0x 15.1x 21.6%

Lennar Corporation $12,139.7 $18,720.7 $12,237.4 $2,592.7 $1,401.4 21.2% 11.5% 1.5x 13.4x 20.8%

M/I Homes, Inc. $671.0 $1,360.3 $1,829.6 $360.8 $132.4 19.7% 7.2% 0.7x 10.3x 17.5%

M.D.C. Holdings, Inc. $1,722.9 $2,269.1 $2,581.5 $460.8 $199.5 17.9% 7.7% 0.9x 11.4x 15.2%

Meritage Homes Corporation $1,790.2 $2,931.0 $3,121.4 $565.7 $241.9 18.1% 7.8% 0.9x 12.1x 17.0%

NVR, Inc. $10,688.0 $10,766.3 $6,123.4 $1,160.6 $800.1 19.0% 13.1% 1.8x 13.5x 12.0%

PulteGroup, Inc. $8,245.7 $11,321.7 $8,085.7 $1,966.6 $1,107.0 24.3% 13.7% 1.4x 10.2x 12.7%

Toll Brothers, Inc. $6,562.8 $9,448.9 $5,642.6 $1,100.1 $534.4 19.5% 9.5% 1.7x 17.7x 18.7%

25th Percentile $1,756.5 $2,600.1 $2,851.5 $513.3 $220.7 18.0% 7.5% 0.9x 10.4x 13.9%

Median $4,036.8 $7,791.7 $5,642.6 $1,100.1 $534.4 19.5% 9.5% 1.2x 12.1x 17.5%

75th Percentile $9,466.9 $11,044.0 $7,379.7 $1,694.8 $953.5 20.7% 11.9% 1.5x 14.3x 21.2%

7

Cherry Tree Building Products Index





HVAC

AAON, Inc. $1,813.5 $1,761.7 $383.6 $116.3 $89.3 30.3% 23.3% 4.6x 19.7x 5.0%

Daikin Industries,Ltd. $29,589.7 $32,189.5 $18,650.8 $6,624.9 $2,865.8 35.5% 15.4% 1.7x 11.2x 4.7%

Ingersoll-Rand Plc $22,619.6 $25,447.7 $13,835.6 $4,313.4 $1,983.4 31.2% 14.3% 1.8x 12.8x 3.2%

Lennox International Inc. $7,549.3 $8,677.3 $3,802.8 $1,129.7 $550.1 29.7% 14.5% 2.3x 15.8x 5.1%

25th Percentile $6,115.3 $6,948.4 $2,948.0 $876.3 $434.9 30.2% 14.4% 1.8x 12.4x 4.3%

Median $15,084.4 $17,062.5 $8,819.2 $2,721.6 $1,266.8 30.7% 14.9% 2.1x 14.3x 4.8%

75th Percentile $24,362.1 $27,133.1 $15,039.4 $4,891.3 $2,204.0 32.3% 17.3% 2.9x 16.8x 5.0%

Roofing, Siding & Insulation

Continental Building Products, Inc. $998.9 $1,207.1 $474.0 $122.0 $131.3 25.7% 27.7% 2.5x 9.2x 5.0%

James Hardie Industries plc $6,134.3 $6,572.8 $1,951.6 $667.4 $429.5 34.2% 22.0% 3.4x 15.3x 8.8%

Kingspan Group plc $7,615.8 $8,193.9 $3,867.3 $1,127.9 $478.6 29.2% 12.4% 2.1x 17.1x 20.5%

Owens Corning $8,600.8 $11,129.8 $5,976.0 $1,473.0 $1,080.0 24.6% 18.1% 1.9x 10.3x 4.5%

Rockwool International A/S $5,603.4 $5,502.7 $2,601.1 $1,703.8 $437.6 65.5% 16.8% 2.1x 12.6x 2.9%

USG Corporation $4,682.3 $5,329.3 $3,079.0 $665.0 $487.0 21.6% 15.8% 1.7x 10.9x (5.4%)

25th Percentile $4,912.6 $5,372.7 $2,114.0 $665.6 $431.5 24.9% 16.1% 1.9x 10.5x 3.3%

Median $5,868.9 $6,037.8 $2,840.1 $897.6 $458.1 27.4% 17.4% 2.1x 11.8x 4.8%

75th Percentile $7,245.4 $7,788.7 $3,670.2 $1,386.7 $484.9 32.9% 21.0% 2.4x 14.6x 7.8%

Windows & Doors

Deceuninck NV $524.9 $656.3 $775.1 $227.9 $73.3 29.4% 9.5% 0.8x 9.0x 7.7%

JELD-WEN Holding, inc. $3,738.1 $4,766.2 $3,702.2 $848.4 $332.7 22.9% 9.0% 1.3x 14.3x –

Masonite International Corporation $2,044.5 $2,494.4 $1,977.6 $403.2 $225.4 20.4% 11.4% 1.3x 11.1x 4.5%

PGT Innovations, Inc. $741.6 $940.5 $489.4 $150.5 $77.4 30.8% 15.8% 1.9x 12.2x 21.7%

Ply Gem Holdings, Inc $1,167.2 $2,005.0 $1,967.5 $466.7 $229.3 23.7% 11.7% 1.0x 8.7x 11.5%

Quanex Building Products Corporation $797.3 $1,045.9 $883.6 $198.5 $95.1 22.5% 10.8% 1.2x 11.0x 15.5%

Tyman plc $766.4 $1,020.7 $671.5 $248.6 $116.8 37.0% 17.4% 1.5x 8.7x 14.8%

25th Percentile $754.0 $980.6 $723.3 $213.2 $86.3 22.7% 10.1% 1.1x 8.9x 8.7%

Median $797.3 $1,045.9 $883.6 $248.6 $116.8 23.7% 11.4% 1.3x 11.0x 13.2%

75th Percentile $1,605.9 $2,249.7 $1,972.5 $434.9 $227.3 30.1% 13.7% 1.4x 11.6x 15.3%

Plumbing & Cabinetry

American Woodmark Corporation $1,564.1 $1,351.6 $1,048.9 $223.8 $123.5 21.3% 11.8% 1.3x 10.9x 12.3%

Fortune Brands Home & Security, Inc. $10,354.2 $11,494.9 $5,132.8 $1,889.1 $822.4 36.8% 16.0% 2.2x 14.0x 10.4%

Masco Corporation $12,428.3 $14,577.3 $7,470.0 $2,532.0 $1,226.0 33.9% 16.4% 2.0x 11.9x (0.8%)

Toto Ltd. $7,120.5 $6,681.5 $5,139.0 $1,962.1 $602.1 38.2% 11.7% 1.3x 11.1x –

25th Percentile $5,731.4 $5,349.0 $4,111.8 $1,472.8 $482.4 30.8% 11.8% 1.3x 11.1x 4.8%

Median $8,737.3 $9,088.2 $5,135.9 $1,925.6 $712.2 35.4% 13.9% 1.6x 11.5x 10.4%

75th Percentile $10,872.7 $12,265.5 $5,721.8 $2,104.6 $923.3 37.1% 16.1% 2.0x 12.4x 11.4%

8







Floors & Surfaces

Armstrong Flooring, Inc. $426.6 $478.4 $1,147.6 $219.2 $62.1 19.1% 5.4% 0.4x 7.7x –

Interface, Inc. $1,348.2 $1,511.8 $960.7 $368.6 $137.7 38.4% 14.3% 1.6x 11.0x (0.9%)

Mohawk Industries, Inc. $18,399.4 $21,232.4 $9,150.4 $2,922.6 $1,752.4 31.9% 19.2% 2.3x 12.1x 5.7%

Tarkett S.A. $2,856.5 $3,368.2 $3,200.5 $851.1 $177.3 26.6% 5.5% 1.1x 19.0x 4.6%

25th Percentile $1,117.8 $1,253.5 $1,100.9 $331.2 $118.8 24.7% 5.5% 0.9x 10.2x 1.9%

Median $2,102.4 $2,440.0 $2,174.0 $609.8 $157.5 29.3% 9.9% 1.3x 11.5x 4.6%

75th Percentile $6,742.3 $7,834.3 $4,687.9 $1,369.0 $571.1 33.5% 15.5% 1.8x 13.8x 5.1%

Lumber & Wood Products

Canfor Corporation $2,432.6 $2,734.2 $3,428.7 $1,126.8 $512.0 32.9% 14.9% 0.8x 5.3x 11.5%

Louisiana-Pacific Corporation $3,921.1 $3,557.2 $2,451.4 $645.3 $443.5 26.3% 18.1% 1.5x 8.0x 7.9%

Norbord Inc. $3,275.1 $3,836.6 $1,938.0 $505.0 $487.0 26.1% 25.1% 2.0x 7.9x 10.6%

Trex Company, Inc. $2,648.4 $2,639.9 $504.2 $205.2 $131.6 40.7% 26.1% 5.2x 20.1x 12.1%

Universal Forest Products, Inc. $2,004.6 $2,214.1 $3,604.8 $509.3 $215.4 14.1% 6.0% 0.6x 10.3x 12.9%

West Fraser Timber Co. Ltd. $4,502.9 $4,637.3 $3,672.5 $1,362.7 $660.9 37.1% 18.0% 1.3x 7.0x 10.1%

Weyerhaeuser Co. $25,622.6 $32,036.6 $6,816.0 $1,656.0 $1,692.0 24.3% 24.8% 4.7x 18.9x (2.4%)

25th Percentile $2,540.5 $2,687.0 $2,194.7 $507.2 $329.4 25.2% 16.5% 1.0x 7.4x 9.0%

Median $3,275.1 $3,557.2 $3,428.7 $645.3 $487.0 26.3% 18.1% 1.5x 8.0x 10.6%

75th Percentile $4,212.0 $4,237.0 $3,638.6 $1,244.7 $586.5 35.0% 25.0% 3.3x 14.6x 11.8%

Cement, Concrete & Aggregates

Boral Limited $6,226.3 $8,053.8 $3,267.4 $1,073.9 $456.5 32.9% 14.0% 2.5x 17.6x 0.4%

CEMEX, S.A.B. de C.V. $13,664.4 $27,813.0 $14,344.5 $5,007.2 $2,771.2 34.9% 19.3% 1.9x 10.0x 8.7%

CRH plc $31,905.2 $40,156.0 $31,269.8 $10,168.9 $3,606.4 32.5% 11.5% 1.3x 11.1x 14.6%

Eagle Materials Inc. $5,174.7 $5,824.1 $1,279.8 $327.4 $394.3 25.6% 30.8% 4.6x 14.8x 10.9%

HeidelbergCement AG $20,366.9 $34,232.0 $19,585.6 $11,953.8 $3,287.8 61.0% 16.8% 1.7x 10.4x 13.4%

LafargeHolcim Ltd $35,382.7 $55,684.0 $27,182.3 $11,695.6 $5,636.0 43.0% 20.7% 2.0x 9.9x 9.6%

Martin Marietta Materials, Inc. $12,959.4 $14,711.2 $3,715.3 $937.4 $962.2 25.2% 25.9% 4.0x 15.3x 21.5%

Summit Materials, Inc. $3,443.4 $4,937.8 $1,760.8 $597.2 $368.4 33.9% 20.9% 2.8x 13.4x 19.6%

U.S. Concrete, Inc. $1,210.1 $1,612.2 $1,287.4 $286.7 $177.0 22.3% 13.8% 1.3x 9.1x 25.5%

Vulcan Materials Company $15,820.1 $18,025.4 $3,699.2 $995.7 $940.9 26.9% 25.4% 4.9x 19.2x 9.0%

25th Percentile $5,437.6 $6,381.6 $2,137.4 $682.2 $409.8 25.9% 14.7% 1.8x 10.1x 9.1%

Median $13,311.9 $16,368.3 $3,707.3 $1,034.8 $951.6 32.7% 20.0% 2.3x 12.3x 12.2%

75th Percentile $19,230.2 $32,627.2 $18,275.4 $8,878.4 $3,158.7 34.7% 24.3% 3.7x 15.2x 18.3%

9



ABOUT CHERRY TREE

History and BackgroundCherry Tree is a private investment banking and wealth management firm headquartered in Minneapolis, Minnesota. Our firm specializes in serving middle market companies and their owners, whether private, public, or divisions of larger corporations. Founded in 1980, Cherry Tree managed several successful institutional private funds focusing on platform acquisitions. Those funds led to more than 300 financings, 26 public offerings, and 41 strategic sales. In 1996 the firm diversified into investment banking services to take advantage of our long history and position in the market. In 2003 we added wealth management to our operations by acquiring and growing our existing business. Our professionals collectively have been members of more than 80 boards of directors, worked with more than 250 different companies, and advised on hundreds of financings and M&A transactions.

Broad Market ExpertiseCherry Tree has been working with middle market companies for more than 35 years. Our core M&A activity is sell-side engagements with middle market companies where ownership wants to achieve some liquidity goals or desires to recapitalize its business to better position the company for future growth. Additionally, we represent buy-side clients attempting to add acquisition strategies to complement their organic growth efforts. We are experts in the capital markets, having previously managed four private funds. Our firm primarily has been focused on investment banking transactions since 1996 and has an exceptional team of dedicated investment banking professionals. Most of our managing directors have had C-level operating experience with backgrounds as CEOs or CFOs. Collectively, they represent more than 200 years of transaction and operating experience.

ResearchWe distinguish our firm by conducting comprehensive research and publishing our findings in reports that provide in-depth analyses of selected industries and overall market conditions. For each client assignment, we apply our internal research capabilities and our deep domain expertise in relevant markets in order to provide the highest value to our clients. Some of our industry research is sponsored by our clients with an interest in specific industry segments.

Contacting Cherry TreeFor more information, please contact one of our professionals listed below, or visit us at www.cherrytree.com.

Dave Latzke Ben Ikeda James DohnalekManaging Director Senior Associate Analyst

[email protected] [email protected] [email protected] 952.253.6015 952.253.6017

Additional Recent Cherry Tree Research:

Education For-Profit: PreK-12 (Chad Johnson, [email protected], 952.253.6010)

Information Technology Services (Elmer Baldwin, [email protected], 952.253.6001)

Technology Enabled Business Services (Mik Gusenius, [email protected], 952.253.6005)

© Cherry Tree & Associates | 2017

301 Carlson Parkway, Suite 103, Minneapolis, MN 55305

(952) 890-9012• [email protected] • www.cherrytree.com

Important Disclosures

The information included in this publication has been obtained from public sources, and is not based upon private or confidential Cherry Tree information. Cherry Treegathers its data from sources it considers reliable. However, it does not guarantee the accuracy or completeness of the information provided within this publication. Anyopinions presented reflect the current judgment of the authors and are subject to change. Cherry Tree makes no warranties, expressed or implied, regarding the accuracy ofthis information or any opinions expressed by the authors. Officers, directors, partners of Cherry Tree and Cherry Tree proprietary investment funds may have positions in thesecurities of the companies discussed, and certain affiliates of Cherry Tree may recommend to specific clients the purchase and sale of securities discussed in thepublication. This publication does not constitute a recommendation with respect to the securities of any company discussed herein, and it should not be construed as such.Cherry Tree or its affiliates may from time to time provide investment banking or related services to these companies. Like all Cherry Tree employees, the authors of thispublication receive compensation that is affected by overall firm profitability. We undertake no obligation to update any information in this publication. 

The Building Products Index is a hypothetical index, and does not reflect an actual investment portfolio. Comparisons between the Building Products Index and other indicesare for illustrative purposes only.  Correlations in performance information for the Building Products Index and other indices should not be relied upon as indicative of risksinvolved in owning or holding a portfolio of securities similar to the Building Products Index. Past performance should not be relied upon as indicative of future performance.

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