Metal Roofing & Siding Systems - Building Materials, Products
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www.harriswilliams.com
Investment banking services are provided by Harris Williams LLC, a registered broker-dealer and member of FINRA and SIPC, and Harris Williams & Co. Ltd, which is private limitedcompany incorporated under English law with its registered office at 5th Floor, 6 St. Andrew Street, London EC4A 3AE, UK, registered with the Registrar of Companies for England andWales (registration number 7078852). Harris Williams & Co. Ltd is authorized and regulated by the Financial Conduct Authority. Harris Williams & Co. is a trade name under which HarrisWilliams LLC and Harris Williams & Co. Ltd conduct business.
BUILDING PRODUCTS & MATERIALSINDUSTRY UPDATE │ JANUARY 2017
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BUILDING PRODUCTS & MATERIALS GROUP OVERVIEW
1
CONTENTS
WHAT WE’RE READING
PUBLIC MARKETS
PUBLIC COMPARABLES
M&A ACTIVITY
CONTACTS
Mike HoganManaging Director
+1 (804) 915-0104
Ryan NelsonManaging Director
+1 (804) 915-0121
Trey PackardVice President
+1 (804) 887-6016
INTRODUCTION
Harris Williams & Co. is pleased to present our Building Products and MaterialsIndustry Update for January 2017. This report provides commentary and analysison current capital market trends and merger and acquisition dynamics within theglobal building products and materials industry.
We hope you find this edition helpful and encourage you to contact us directly ifyou would like to discuss our perspective on current industry trends and M&Aopportunities or our relevant industry experience.
BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ JANUARY 2017
OUR PRACTICE
Harris Williams & Co. is a leading advisor to the building products and materialsindustry. Our significant experience covers a broad range of end markets,industries, and business models.
Aggregates
Aluminum
Asphalt
Bricks
Clay
Glass
Precast / Ready-Mix
Concrete
Steel
Stone
Acoustical
Cabinets and
Countertops
Carpet and Flooring
Gypsum / Wallboard
Electrical Fixtures
HVAC
Lumber
Plumbing Fixtures
Roofing
Siding
Tools and Hardware
Windows and Doors
Architectural and
Engineering
Installation and
Contracting
Lumber and
Hardware
Plumbing
Roofing and Siding
Site Development
Wallboard
Construction
MaterialsBuilding Products
Distribution &
Services
www.harriswilliams.com
Construction
Materials
Building
Products
Distribution &
Services has been acquired by
a portfolio company of
Select Atlanta,
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has been acquired by
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WHAT WE’RE READING
2
HOUSING WILL CONTINUE GRADUAL CLIMB TO HIGHER GROUND IN 2017
WEST COAST CONTINUES TO LEAD THE TOP U.S. HOUSING MARKETS
U.S. CONTRACTORS GEARING UP FOR TRUMP SPENDING WINDFALL
CONSTRUCTION UNEMPLOYMENT RATES IMPROVE IN 38 STATES YEAR-OVER-YEAR
CNBC 1/10/2017
American contractors are getting their shovels ready for the incoming Trump administration and they plan to boostpayrolls to take on new projects.
Some 3 out of 4 U.S. construction firms expect to increase head count this year, according to a survey releasedTuesday by the Associated General Contractors of America and Sage Construction and Real Estate.
The bullish outlook is apparently based on high hopes that Donald Trump will make good on campaign promises toinvest hundreds of billions of dollars in federal spending on new infrastructure projects.
Read the full article here.
BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ JANUARY 2017
FIRMS PLAN TO EXPAND HEADCOUNT IN 2017 AS CONTRACTORS EXPECT STRONG DEMAND
NAHB 1/10/2017
Fueled by a growing economy, solid employment gains and rising household formations, single-family production willcontinue on a gradual, upward trajectory in 2017, according to economists speaking at the National Association ofHome Builders (NAHB) International Builders’ Show in Orlando, Fla., today.
“While positive developments on the demand side will support solid growth in the single-family housing sector in 2017,builders in many markets continue to face supply-side constraints led by the three ‘Ls’ – lots, labor and lending,” saidNAHB Chief Economist Robert Dietz.
Read the full article here.
Metal Construction 1/4/2017
November not seasonally adjusted (NSA) construction unemployment rates were down in 38 states and the nation ona year-over-year basis, according to analysis released today by Associated Builders and Contractors (ABC). The ratesfor two states, Kansas and Texas, were unchanged from November 2015. The national NSA constructionunemployment rate of 5.7% was down 0.5% from a year ago and unchanged from October, according to data fromthe Bureau of Labor Statistics (BLS).
Read the full article here.
ACG 1/10/2016
Seventy-three percent of construction firms plan to expand their payrolls in 2017 as contractors expect private andpublic sector demand to grow in all market segments, according to survey results released today by the AssociatedGeneral Contractors of America and Sage Construction and Real Estate. Despite the general optimism outlined inExpecting a Post-Election Bump: The 2017 Construction Industry Hiring and Business Outlook, many firms report theyremain worried about the availability of qualified workers and rising health and regulatory costs.
Read the full article here.
Construction Dive 1/10/2017
The latest predictions by Veros Real Estate Solutions dovetail other recent forecasts of home price appreciation beingheavily led by the West, along with smaller markets away from the coasts.
Seattle seems to consistently appear near or at the top of everyone's list as the hottest market for the year ahead asthe city swells in size, driven by solid employment opportunities and wage growth, which is squeezing supplies andforcing prices upwards.
Read the full article here.
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ECONOMIC UPDATE
3
INDUSTRIAL PRODUCTION INDEX
BUILDING PRODUCTS & MATERIALS
GROSS DOMESTIC PRODUCT
Real GDP increased by an annual rate of0.9% in the third quarter of 2016, and hasincreased 1.7% YoY
Current dollar GDP increased 1.2%, or $225billion in the third quarter to a level of $18.7trillion
The Gross Domestic Income (GDI), whichmeasures the value of the production ofgoods and services in the U.S. as the costsincurred and the incomes earned inproduction, increased 1.2% in the thirdquarter of 2016
Industrial production decreased 0.4% inNovember after increasing 0.1% in October;it is down 0.6% YoY since December 2015
Capacity utilization for the industrial sectorfell 0.4% in November to 74.99% and is down0.7% since November 2015
Seasonally-Adjusted
Seasonally-Adjusted
(QoQ percentage change)
(Indexed to 2012)
INDUSTRY UPDATE │ JANUARY 2017
Source: Federal Reserve
Source: Bureau of Economic Analysis
(2.5%)
(2.0%)
(1.5%)
(1.0%)
(0.5%)
0.0%
0.5%
1.0%
1.5%
Q3
2007
Q3
2008
Q3
2009
Q3
2010
Q3
2011
Q3
2012
Q3
2013
Q3
2014
Q3
2015
Q3
2016
94
96
98
100
102
104
106
108
110
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ECONOMIC UPDATE
4
PERSONAL CONSUMPTION EXPENDITURES
ECONOMIC SENTIMENT
In November, personal income decreased $28.2 billion, or 3.5%, while personal consumption expenditures (PCE) increased $24 billion, or 0.19%
Wages and salaries increased 0.5% in July, after increasing 0.6% in April
Purchases of durable goods declined 4.5% in November compared to an increase of 5.0% in October; while purchases of non-durable goods decreased 0.3%, compared to a decrease of 0.5% in October
The Leading Economic Index (LEI)measures how consumers view prospectsfor their own financial situation, how theyview the near-term general economyprospects, and their long-term view ofeconomic prospects
The LEI for the U.S. was flat in November at124.6, following a 0.1% increase in October,and a 0.3% increase in September
The LEI is up 0.7% YoY since November 2015
The continued rise in LEI suggests economicgrowth will remain moderate in 2017 withlittle reason to expect growth to pick upsubstantially
BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ JANUARY 2017
(Percentage change presented on a 3-month rolling average basis)
(Indexed to 2010)
Source: Conference Board Leading Economic Index (LEI)
Source: Federal Reserve
(0.1%)
0.0%
0.1%
0.2%
0.3%
0.4%
0.5%
0.6%
0.7%
Nov-10 Nov-11 Nov-12 Nov-13 Nov-14 Nov-15 Nov-16
100
105
110
115
120
125
130
Nov-13 May-14 Nov-14 May-15 Nov-15 May-16 Nov-16
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ECONOMIC UPDATE
CONSUMER CONFIDENCE INDEX (CCI)
KEY INTEREST RATES
The Consumer Confidence Indexincreased to 113.7 in December, upfrom 109.4 in November
Consumer confidence is currently up17.6% over the last six months, and up18.1% since December 2015
Consumers’ appraisal of currentconditions was mixed in December.Those saying business conditions are“good” decreased from 29.7% to 29.2%;those saying business conditions are“bad” increased from 15.2% to 17.3%
Consumers had mixed feelings aboutthe labor market. The proportionclaiming jobs are “plentiful” decreasedfrom 27.8% to 26.9%, while thoseclaiming jobs are “hard to get”increased from 21.2% to 22.5%
The 30-year mortgage rate increased inDecember 2016 to 3.46%
The December mortgage rate remains 50basis points lower than the rate fromDecember 2015
BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ JANUARY 2017
Seasonally-Adjusted
(Indexed to 1985)
Source: Federal Reserve
Source: Conference Board
0%
1%
2%
3%
4%
5%
6%
7%
8%
30-Year Mortgage Rate
10-Year Treasury Rate
Effective Federal Funds Rate
0
20
40
60
80
100
120
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0
500
1,000
1,500
2,000
2,500
3,000
1966 1971 1976 1981 1986 1991 1996 2001 2006 2011 2016
6
ECONOMIC UPDATE
U.S. NON-RESIDENTIAL CONSTRUCTION
U.S. HOUSING STARTS
BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ JANUARY 2017
Non-residential construction continues tostrengthen having increased 4.9% sinceNovember 2015
Non-residential construction increased by0.8% from November to October, andhas increased 2.8% over the last sixmonths
In the release of its estimates forNovember 2015, the U.S. Census Bureaurestated each of its monthly estimatesgoing back to January 2005, citing aprocessing error in the tabulation of data
Seasonally-Adjusted Annual Rate
($ in billions)
U.S. housing starts in Novemberdecreased 18.7% over October, anddecreased 6.9% YoY
Decreases were driven by a 45.1% MoMdecrease in multi-family homes whilesingle-family homes decreased 4.0%
Housing starts continue to rebound fromunprecedented lows reached in 2009,yet remain ~20% below the 50-yearaverage of 1.4 million starts per year
(Units in 000’s)
November 2016 Annualized Starts: 1,092
MoM Δ: (18.7%)
YoY Δ: (6.9%)
Source: U.S. Census Bureau
Source: U.S. Census Bureau
50-year average
of 1,441 starts
$450
$500
$550
$600
$650
$700
$750
Non-Residential Construction 12 Mo. Rolling Avg.
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30
35
40
45
50
55
60
65
70
Q3 2008 Q3 2010 Q3 2012 Q3 2014 Q3 2016
7
ECONOMIC UPDATE
RESIDENTIAL HOUSING SPENDING
NAHB REMODELING MARKET INDEX (RMI)
Total residential building spending for2016 is projected to be $412 billion, up7.3% from $382 billion in 2015
Residential building spending increasedat a 10.0% CAGR between 2012 and2015
FMI projects that spending will increaseat an 8.6% CAGR from 2016E through2019P
The Q3 RMI was 59 and has not dippedbelow 50 since Q3 2009
The overall RMI averages the indicatorsof current and future remodeling activity.An RMI over 50 indicates that remodelersare reporting higher activity than theprevious quarter
On a seasonally-adjusted basis, RMIposted an increase of 0.7% year-over-year in the third quarter
BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ JANUARY 2017
2016E – 2019P CAGR: 8.6%
$249 $253
$287
$342 $354 $382
$412 $447
$486
$527
0
100
200
300
400
500
600
2010 2011 2012 2013 2014 2015 2016E 2017P 2018P 2019P
Single-Family Multi-Family Improvements*
*Improvements includes additions, alterations, and major replacements. It
does not include maintenance and repairs.
($ in billions)
Source: FMI Consulting
2012 – 2015 CAGR: 10.0%
Source: NAHB
Seasonally-Adjusted Annual Rate
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0
10
20
30
40
50
60
70
80
8
M&A MARKET TRENDS
MARKET OBSERVATIONS
BUILDING PRODUCTS QUARTERLY M&A ACTIVITY
After a record year for M&A in 2015, 16.2% higher than 2007’s previous peak, 2016 experienced some moderation,with global M&A volume essentially flat year over year
Despite flat M&A volume, valuations have remained high, with investors willing to pay up for quality assets
Credit markets also remain strong, with average total debt multiples for middle market leverage buyouts above 5x
Private equity firms in the U.S. have over $540 billion of dry powder, with the majority held in 2012-2015 vintagefunds
North American building products deal activity was down 12% in Q4 after being down 24% in Q3 compared to Q22016
YoY North American building products deal activity was down 23% after a strong 2014 and 2015
BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ JANUARY 2017
Note: Includes all building products or construction materials M&A transactions announced in the U.S. or Canada
Total Transactions: 270
YoY Change: 55.2%
Total Transactions: 263
YoY Change: (2.6%)
Total Transactions: 267
YoY Change: 1.5%
Total Transactions: 217
YoY Change: (18.7%)
Total Transactions: 242
YoY Change: 11.5%
Total Transactions: 234
YoY Change: (3.3%)
Q4
2010
Q4
2011
Q4
2012
Q4
2013
Q4
2014
Q4
2015
Source: Mergermarket
Q4
2016
Total Transactions: 181
YoY Change: (22.6%)
Source: Mergermarket
PAGE | 9
SELECT SECTOR OVERVIEWS & TRENDS
LUMBER AND WOOD PRODUCTS
ROOFING
WINDOWS AND DOORS
Description
Lumber, boards, beams, bolts oriented strand board, poles, shingles,
siding, and wood chips
Industry Commentary:
70% of U.S. lumber demand is driven by housing, including new
construction and remodeling
Prices strengthened throughout 2016 after their depressed levels in 2015,
but still remain lower than 2014 levels
Stable price growth points to continued recovery in the broader
construction market
Framing Lumber Composite Price Index
($ per thousand board feet)
Description
Roofing market includes bituminous, wood, and tile roofing used in residential
applications and metal elastomeric and plastic roofing used in non-
residential applications
Industry Commentary:
U.S. demand for roofing is projected to rise 3.9% annually to 252 million
squares in 2019, representing a total market value of $21.4 billion dollars
Demand for roofing is closely linked to building construction expenditures, but
has been more sheltered than other building products markets from the
housing slump due to the non-discretionary need for roof repair and
replacement
Houses need to be re-roofed every fifteen years on average and the aging
U.S. housing stock is projected to drive continued demand for replacement
Additionally, renewed strength in new housing construction and a generally
stronger economic climate will support growth
Roofing Demand by Primary Segment
Description
Windows and doors market includes metal, wood, and vinyl windows
and doors for residential and non-residential end markets
Industry Commentary:
Window and door demand is driven by new commercial and residential
construction, as well as repair and remodel spending
Quarterly remodeling spend increased 0.4% during Q4 2016, following a
2.2% increase in Q3 2016. Spend for Q4 was ~$305 billion
Continued strength in home prices has increased homeowners’ equity
and demand for remodeling work, providing a strong tailwind for the
window and door industry
Leading Indicator of Remodeling Activity
($ in billions)
BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ JANUARY 2017
Residential
Reroofing
44%
Non-Residential
Reroofing
37%
New Residential
11%
New Non-
Residential
8%
Source: Random Lengths
Source: Freedonia
Source: Joint Center for Housing Studies of
Harvard University
$100
$200
$300
$400
$500
$80
$130
$180
$230
$280
$330
$380
Q1 '13 Q1 '14 Q1 '15 Q1 '16 Q1 '17
PAGE |
SELECT SECTOR OVERVIEWS & TRENDS
10
WALLBOARD AND PLASTER
HVAC
PLUMBING FIXTURES AND FITTINGS
Description
Primarily made from gypsum, products include wallboard, plaster,
plasterboard, molding, ornamental moldings, statuary, and
architectural plasterwork
Industry Commentary:
Gypsum product demand is primarily driven by new commercial and
residential construction, as well as repair and remodel spending
Over the past two years, rising wallboard prices and cost-saving
measures have improved industry profit margins
New home inventories remain low and as demand for new homes has
grown, builders have begun increasing their stock
U.S. Wallboard Demand Outlook
($ in millions)
U.S. HVAC Demand Outlook
($ in millions)
Plumping Equipment Industry Revenue Outlook
($in millions)
BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ JANUARY 2017
Description
Residential, commercial, and industrial heating, ventilation, air
conditioning, and refrigeration equipment
Industry Commentary:
U.S. shipments of central air conditioners and air-source heat pumps
dropped modestly in 2015 compared to 2014
HVAC demand is primarily driven by residential and non-residential
construction, HVAC replacement, and weather patterns
Aging domestic buildings (75% of buildings were built before the 1980s)
are fueling the demand for replacement equipment
New minimum energy efficiency standards for air conditioning and
corresponding tax credits are driving replacement demand
Description
Plumbing fixtures, bathtub and shower fixtures, and indoor pipes
constitute this segment
Industry Commentary:
Through 2018, U.S. demand for plumbing fixtures and fittings is
projected to advance ~3% annually to nearly $55 billion
Primary demand determinants are repair and remodel spending, new
home construction, and non-residential improvement and repair
Industry regulatory bodies continue to focus on water efficiency, with
states leading the way on new codes
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
2007 2009 2011 2013 2015 2017P
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
2007 2009 2011 2013 2015 2017P
Source: IBIS World
Source: IBIS World
Source: IBIS World
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
2007 2009 2011 2013 2015 2017P
PAGE |
1,200 1,200 1,200 1,220 1,230 1,310 1,390
838 807 812 820 850904
931
0
500
1,000
1,500
2,000
2,500
2009 2010 2011 2012 2013 2014 2015Crushed Stone Sand/Gravel
SELECT SECTOR OVERVIEWS & TRENDS
11
AGGREGATES
ASPHALT
CEMENT AND CONCRETE
BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ JANUARY 2017
Description
Broad category of materials such as crushed rock, manufactured sand,
natural sand, and gravel
Most-used material in the world, after water
Industry Commentary:
Markets are local in nature due to high shipping costs
Major players include Lafarge, CEMEX, CRH, Heidelberg Cement, Martin
Marietta, Vulcan Materials, Summit Materials, and a large number of
independent operators
White limestone loadings in the U.S. have decreased of late, but demand
is expected to grow strongly in the coming years
U.S. Aggregates Consumption
(values in millions of metric tons)
Description
Paving and roofing materials include asphalt and tar-paving mixtures and
blocks, shingles, roofing cements, and coatings
Industry Commentary:
Asphalt is used over 85% of the time in U.S. highway and road construction
Resurgent U.S. housing activity and recent government infrastructure
programs have supported asphalt shingle and roofing cement demand
According to the National Asphalt Paving Association (NAPA), nearly a
third of all asphalt is produced with warm-mix asphalt technologies, up
from less than 5% in 2009
Trailing 12-month Average U.S.
Refinery Net Production of
Asphalt and Road Oil
(thousands of barrels)
Description
Portland, natural, masonry, pozzolanic, and other hydraulic cements
Typically, manufacturers also thermally treat and mine or quarry lime
Industry Commentary:
U.S. cement consumption historically has exceeded domestic production
capacity
Concrete has been gaining share over asphalt since 2008
U.S. cement capacity and import terminals are largely owned or
controlled by international producers
The recent passage of the FAST act provides some certainty for the
cement and concrete industry, but industry leaders are still calling for
increased funding to support a refurbishing of U.S. water infrastructure and
a modernized airport system
U.S. Cement Demand Outlook
($ in millions)
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
2007 2009 2011 2013 2015 2017P
Source: U.S. Geological Survey
Source: U.S. Energy Information Administration
Source: IBIS World
0
4,000
8,000
12,000
16,000
20,000
PAGE |
PUBLIC MARKETS
BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ JANUARY 2017
12
MEDIAN TEV / 2016E EBITDA
MEDIAN REVENUE GROWTH (2016E – 2017P)
MEDIAN EBITDA MARGIN (2012 – 2016E) MEDIAN EBITDA MARGIN (2016E – 2017P)
MEDIAN CAPEX / 2016E REVENUE
MEDIAN REVENUE GROWTH (2012 – 2016E)
HISTORICAL STOCK PRICES (JANUARY 16TH, 2011 – JANUARY 16TH, 2017)
HISTORICAL MEDIAN TEV / NTM EBITDA (JANUARY 16TH, 2011 – JANUARY 16TH, 2017)
100
140
180
220
260 Building Products Index
Building Products Distributors Index
Construction Materials Index
S&P 500 Index
6.0x
7.0x
8.0x
9.0x
10.0x
11.0x
12.0x
13.0x
Building Products Index
Building Products Distributors Index
Construction Materials Index
S&P 500 Index
9.1%
8.1%
7.8%
Construction Materials
Building Products Distributors
Building Products
10.5%
8.8%
6.2%
Construction Materials
Building Products Distributors
Building Products
19.0%
6.6%
16.3%
Construction Materials
Building Products Distributors
Building Products
14.9%
4.9%
12.7%
Construction Materials
Building Products Distributors
Building Products
6.5%
1.0%
3.1%
Construction Materials
Building Products Distributors
Building Products
9.6x
9.9x
9.9x
Construction Materials
Building Products Distributors
Building Products
PAGE |
PUBLIC COMPARABLES
13
BUILDING PRODUCTS
BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ JANUARY 2017
As of January 16, 2017
Building Products
Stock Performance
Current % of 2016E TEV / EBITDA EBITDA
($ in millions except per share data) Price LTM High Mkt. Cap TEV Rev. EBITDA Current 2016E 2017P
Windows & Doors
Masonite International Corp. $65.30 89.8% $1,863 $2,460 $1,979 $250 12.6% 9.9x 8.5x
Ply Gem Holdings, Inc. 15.85 93.8% 854 1,952 1,891 227 12.0% 8.6x 7.6x
Tyman Plc 3.46 79.7% 749 776 547 91 16.6% 8.5x 7.5x
Quanex Building Products Corporation 20.55 93.9% 715 940 928 110 11.9% 8.5x 8.5x
PGT, Inc. 11.35 90.9% 556 792 459 77 16.8% 10.3x 8.8x
Median 90.9% $928 $110 12.6% 8.6x 8.5x
Roofing, Decking & Siding
Kingspan Group Plc $29.47 99.7% $4,675 $5,743 $3,296 $427 13.0% 13.5x 12.8x
USG Corporation 29.38 91.1% 3,538 5,601 3,136 624 19.9% 9.0x 8.5x
Trex Company, Inc. 69.79 96.6% 1,176 2,033 477 126 26.4% 16.1x 14.3x
Continental Building Products, Inc. 22.50 90.8% 729 1,141 460 132 28.6% 8.7x 8.3x
Median 93.9% $1,807 $279 23.2% 11.2x 10.6x
Cabinets, Plumbing / HVAC
Masco Corporation $32.05 85.8% $10,570 $12,506 $7,360 $1,230 16.7% 10.2x 9.3x
Fortune Brands Home & Security, Inc. 54.27 84.2% 8,875 9,862 5,002 780 15.6% 12.6x 11.0x
Lennox International Inc. 149.38 90.8% 5,580 7,536 3,626 526 14.5% 14.3x 12.8x
American Woodmark Corporation 74.85 83.6% 1,186 1,041 1,019 123 12.0% 8.5x 7.6x
Median 85.0% $4,314 $653 15.0% 11.4x 10.2x
Hardware
ASSA ABLOY AB $18.64 82.7% $23,452 $23,306 $8,002 $1,402 17.5% 16.6x 14.6x
Simpson Manufacturing Co., Inc. 44.47 91.9% 1,645 1,931 857 175 20.5% 11.0x 10.1x
Richelieu Hardware Ltd 19.70 88.2% 1,044 1,142 645 71 11.1% 16.0x 14.6x
Median 88.2% $857 $175 17.5% 16.0x 14.6x
Glass / Building Systems
Owens Corning $53.87 91.8% $5,451 $8,315 $5,600 $1,041 18.6% 8.0x 7.7x
NCI Building Systems, Inc. 16.20 89.5% 1,140 1,513 1,685 166 9.9% 9.1x 8.2x
Apogee Enterprises, Inc. 56.03 99.3% 1,130 1,542 1,094 157 14.4% 9.8x 8.1x
Median 91.8% $1,685 $166 14.4% 9.1x 8.1x
Flooring
Mohawk Industries, Inc. $202.41 93.5% $14,001 $17,736 $8,923 $1,714 19.2% 10.3x 9.8x
Armstrong World Industries, Inc. 39.70 81.6% 2,532 2,954 1,240 316 25.5% 9.3x 8.7x
Interface, Inc. 18.95 98.2% 1,261 1,333 968 134 13.8% 10.0x 8.8x
Median 93.5% $1,240 $316 19.2% 10.0x 8.8x
Overall Median 90.8% $1,462 $201 16.1% 9.9x 8.7x
PAGE |
PUBLIC COMPARABLES
14
BUILDING PRODUCTS DISTRIBUTORS
BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ JANUARY 2017
1) Pro forma EBITDA figures from the presentation for the Rugby Architectural Building Products acquisition
As of January 16, 2017
Building Products Distributors
Stock Performance
Current % of 2016E TEV / EBITDA EBITDA
($ in millions except per share data) Price LTM High Mkt. Cap TEV Rev. EBITDA Current 2016E 2017P
Wolseley plc $6.07 95.8% $13,984 $16,787 $18,737 $1,525 8.1% 11.0x 10.8x
HD Supply Holdings, Inc. 41.87 94.7% 5,257 12,409 7,434 921 12.4% 13.5x 12.4x
Beacon Roofing Supply, Inc. 44.70 90.6% 2,520 3,802 4,127 347 8.4% 10.9x 10.0x
Builders FirstSource, Inc. 11.69 83.0% 1,216 3,274 6,318 370 5.9% 8.9x 7.3x
BMC Stock Holdings, Inc. 19.00 88.4% 1,094 1,668 3,107 194 6.2% 8.6x 7.3x
Hardwoods Distribution Inc. 13.15 85.5% 217 349 598 35 5.9% 9.9x 8.1x
CanWel Building Materials Group Ltd. 4.46 80.7% 146 396 760 40 5.3% 9.8x 8.4x
Huttig Building Products, Inc. 6.42 91.7% 95 226 710 21 3.0% 10.7x 8.4x
Goodfellow Inc. 6.73 72.0% 66 139 452 17 3.8% 8.2x 7.7x
Overall Median 88.4% $3,107 $194 5.9% 9.9x 8.4x
PAGE |
PUBLIC COMPARABLES
15
CONSTRUCTION MATERIALS
BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ JANUARY 2017
As of January 16, 2017
Construction Materials
Stock Performance
Current % of 2016E TEV / EBITDA EBITDA
($ in millions except per share data) Price LTM High Mkt. Cap TEV Rev. EBITDA Current 2016E 2017P
Aggregates and Cement
LafargeHolcim Ltd. $53.72 90.4% $30,430 $53,762 $27,217 $5,551 20.4% 9.7x 9.3x
CRH Plc 35.02 97.6% 23,708 37,760 29,615 3,322 11.2% 11.4x 10.2x
HeidelbergCement AG 92.26 89.7% 15,437 29,726 16,403 3,128 19.1% 9.5x 8.1x
Vulcan Materials Company 124.40 90.0% 12,647 18,647 3,654 1,004 27.5% 18.6x 14.9x
Martin Marietta Materials, Inc. 220.67 93.3% 8,807 15,769 3,579 976 27.3% 16.2x 13.4x
Eagle Materials Inc. 100.81 97.7% 3,402 5,277 1,198 412 34.4% 12.8x 10.9x
Summit Materials, Inc. 23.74 95.0% 1,197 3,339 1,488 365 24.5% 9.2x 7.9x
Median 93.3% $3,654 $1,004 24.5% 11.4x 10.2x
Heavy Construction Materials
James Hardie Industries PLC $15.85 91.5% $6,122 $7,566 $1,908 $470 24.6% 16.1x 13.9x
Boral Limited 3.95 75.2% 3,444 3,856 3,122 462 14.8% 8.4x 7.9x
Headwaters Incorporated 23.35 97.3% 1,253 2,464 975 190 19.5% 13.0x 10.1x
U.S. Concrete, Inc. 62.40 89.6% 783 1,400 1,173 157 13.4% 8.9x 7.2x
Median 90.6% $1,540 $326 17.1% 11.0x 9.0x
Lumber and Wood Products
Weyerhaeuser Company $30.64 92.1% $15,304 $31,157 $6,644 $1,663 25.0% 18.7x 16.0x
West Fraser Timber Co. Ltd. 35.81 85.5% 3,118 3,171 3,408 486 14.3% 6.5x 5.5x
Louisiana-Pacific Corporation 19.90 94.0% 2,573 3,073 2,216 332 15.0% 9.3x 6.5x
Canfor Corporation 11.58 81.4% 2,093 2,033 3,230 407 12.6% 5.0x 4.7x
Norbord Inc. 26.24 96.0% 1,657 2,934 1,733 364 21.0% 8.1x 7.8x
Universal Forest Products, Inc. 102.77 92.6% 1,387 2,153 3,086 206 6.7% 10.5x 8.6x
Boise Cascade Co. 24.70 82.5% 991 1,294 3,912 161 4.1% 8.1x 6.8x
Median 92.1% $3,230 $364 14.3% 8.1x 6.8x
Overall Median 91.8% $3,176 $437 19.3% 9.6x 8.4x
PAGE |
M&A TRANSACTIONS
16
BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ JANUARY 2017
Announced
DateTarget Vertical Business Description Acquirer
1/10/2017 United Subcontractors Building Products
Distribution
Provides insulation, specialty, and shell construction serv ices for
residential and commercial projects.
Trilantic North America
1/6/2017 Everist Materials &
Razorback Concrete
Construction Materials The materials-based acquisitions of Everist and Razorback collectively
bring aggregates operations with more than 100 million tons of
permitted reserves in Colorado and Arkansas, in addition to an
extensive network of vertically integrated ready-mix concrete and
Summit Materials
1/4/2017 Binford Supply Building Products
Distribution
One of the largest residential & commercial fencing distributors in Texas
and the U.S. Binford has over 100 employees across eight locations,
primarily serv ing residential and commercial fencing contractors
throughout TX and OK.
U.S. Fence Solutions
1/4/2017 Tradesmen International Building Products
Distribution
Provider of outsourced skilled craftsmen to non-residential construction
and industrial contractors.
Blackstone
1/2/2017 Stetson Building Products Construction Materials Distributor of over 70,000 SKUs of construction materials, accessories
and tools, primarily for professional concrete and masonry contractors
in the United States and Canada, v ia 48 branches
Construction Supply
12/26/2016 Floors, Inc. & Malibu
Acceptance Corporation
Building Products Full serv ice designer, installer and retailer of flooring products to home
builders and homeowners.
Dunes Point Capital
12/21/2016 Soft-Lite Windows Building Products Manufacturer of v inyl replacement windows. Harvey Building Products
12/21/2016 ForzaStone Construction Materials Manufacturer of thin natural stone panels for commercial and
residential applications.
Home Brands Group
12/20/2016 East Haven Landscape
Products
Building Products
Distribution
Distributor of nursery, hardscapes and landscape supplies. SiteOne Landscape
Supply, Inc.
12/16/2016 BJ Supply Building Products
Distribution
Distributor of roofing and related building products. Beacon Roofing Supply,
Inc.
12/16/2016 O&S Doors Building Products Manufacturer of made-to-measure kitchen doors. Sun Capital Partners, Inc.
12/15/2016 Tectum, Inc. Building Products Manufacturer of acoustical ceiling, wall and structural solutions for
commercial building applications.
Armstrong World Industries
12/15/2016 Rmax Operating Building Products US-based market leader in the production of polyiso insulation products
for complete Building Envelope solutions (roofing and wall systems).
Sika
12/14/2016 Sotawall, Inc. Building Products Designer and fabricator of curtainwall systems for commercial
construction projects.
Apogee Enterprises
12/12/2016 Ray L Hellwig Plumbing &
Heating
Building Products Designer and installer of plumbing systems. Total Facility Solutions
12/7/2016 SGI, Inc. (door and
drywall div isions)
Building Products Interior Products Supply Drywall Div ision and Interior Products Supply
Door Div ision of SGI, Inc.
Clio
12/7/2016 Rosboro Construction Materials Manufacturer of forest products. GMS Inc.
12/6/2016 Top Master Building Products Leading regional countertop manufacturer. Wynnchurch Capital, LLC
12/6/2016 ConTech Lighting Building Products Manufacturer of high-performance and sustainable lighting solutions
and fixtures.
Lev iton
12/5/2016 Bassi Construction Ltd. Building Products Prov ider of construction serv ices. Mosaic Capital
Corporation
PAGE |
M&A TRANSACTIONS
17
BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ JANUARY 2017
Announced
DateTarget Vertical Business Description Acquirer
12/5/2016 ES Windows Building Products
Distribution
US-based distributor of architectural glass, windows, and aluminum
products.
Tecnoglass S.A.
12/2/2016 Xella Building Products World's largest manufacturer of aerated concrete blocks, calcium-
silicate units, and high-performance boards.
Lone Star Funds
12/2/2016 Drossbach Inc. Building Products US-based manufacturer of corrugated flexible tubing. Delfingen Industry, S.A.
11/28/2016 Cemex S.A. (Concrete
Pipe Manufacturing
Business)
Construction Materials Mexico-based supplier of reinforced concrete pipe, concrete box and
culvert.
The Quikrete Companies,
Inc.
11/21/2016 Guardian Industries Corp. Building Products Manufacturer of float glass and fabricated glass products. KGIC Merger Corp. / Koch
Industries
11/21/2016 Headwaters, Inc. Building Products US-based manufacturer and distributor of building products and
construction materials.
Boral Ltd.
11/18/2016 International Chimney
Corp.
Building Products Prov ider of chimney construction and maintenance serv ices. Beroa Corporation
11/14/2016 Koroseal Interior Products Building Products Manufacturer and distributor of decorative, industrial transit and office
products.
Sangetsu Corporation
11/9/2016 Halex Corporation Building Products Manufacturer of flooring installation products. GCP Applied Technologies
11/8/2016 Mesker Door Building Products Designer and manufacturer of hollow metal doors, frames and
assemblies.
Dorma + Kaba Holding AG
11/4/2016 Giant Cement Holding,
Inc.
Construction Materials Manufacturer of concrete, cement, and aggregates. Elementia S.A.
11/3/2016 B.R. Johnson Inc. Building Products
Distribution
Distributor and contractor specializing in windows, doors, hardware,
and specialty products.
Lorraine Capital; Regional
Brands, Inc.
10/29/2016 Alpha Insulation and
Waterproofing, Inc
Building Products US-based provider of commercial insulation, waterproofing,
fireproofing, and fire stopping serv ices.
Installed Building Products
10/20/2016 MI Windows and Doors Building Products Manufactures v inyl and aluminum windows and doors. Management
10/18/2016 US Floors Building Products Manufacturer of wood-plastic composite (WPC) flooring in the LVT
category, as well as cork, bamboo and hardwood products.
Shaw Industries Group
10/17/2016 East Coast Insulators Inc. Building Products Prov ider of residential, commercial and industrial insulation. Installed Building Products,
Inc.
10/11/2016 Granite Source Northern
VA
Building Products US-based provider of granite countertops. Clio Holdings, LLC
10/11/2016 Princess Marble Co Building Products Manufacturer of cultured marble vanity tops, bathtubs, shower bases
and window sills.
Clio Holdings, LLC
10/06/2016 Henry Company LLC Building Products Manufacturer of roof coatings and cement products. American Securities LLC
10/04/2016 United Building Materials,
Inc.
Building Products
Distribution
Distributor of building material such as drywall, metal framing, acoustical
ceilings and insulation to professional contractors.
Gypsum Management and
Supply, Inc.
PAGE |
M&A TRANSACTIONS
18
BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ JANUARY 2017
Announced
DateTarget Vertical Business Description Acquirer
10/03/2016 Low's Ready Mix Construction Materials Manufacturer of ready mixed concrete. Clements Concrete Co.
9/30/2016 The Dicor Corporation Building Products Manufacturer and distributor of air conditioning, heating, ventilating
and related appliances.
Airxcel, Inc.
9/30/2016 American Bath Group, LLC Building Products Designer and manufacturer of fiberglass reinforced plastic, sheet
molded compounds, acrylic bathtubs, and showers.
Lone Star Funds
9/21/2016 All Glass & Windows, Inc. Building Products
Distribution
Installer and distributor of impact-resistant glass and glass-related
products for general contractors and builders.
Prospect Partners, LLC
9/20/2016 United Copper Industries,
Inc
Building Products Manufacturer of copper building wires for the electrical distribution
market.
Southwire Company, LLC
9/16/2016 Polycor Inc. Construction Materials Manufacturer of granite, marble, limestone, recycled glass, karmstone
and soapstone products.
Torquest Partners Inc.
9/16/2016 Swenson Granite
Company LLC
Construction Materials Engages in quarrying and cutting granite. Polycor Inc.
9/16/2016 Groom Energy Solutions
LLC
Building Products Prov ider of commercial and industrial energy solutions including
consulting, designing, building, maintaining and financing energy
projects.
DK Energy US LLC
9/14/2016 Fortiline Building Products
Distribution
Wholesale distributor of underground water, sewer and storm utility
products.
MORSCO
9/7/2016 M.B. Roofing Systems Building Products Specializes in re-roofing commercial properties with low sloped roofing
systems.
Tecta America
9/7/2016 US Impact Systems Building Products Fabricator of storefront window and door products. PGT Industries, Inc.
9/7/2016 Solarfective Products
Limited
Building Products Manufacturer of of roller shades, skylights, and projection screens. Legrand SA
9/6/2016 Fabcon Construction Materials Manufacturer of precast, pre-stressed concrete wall panels for
nonresidential construction applications.
Platinum Equity
9/6/2016 Wilson Parker Homes Building Products Wilson Parker homes focuses on the construction and development of
housing properties
D.R. Horton Inc.
9/2/2016 Olympia Building Supplies Construction Materials Leading supplier of wallboard and related construction products
including steel studs, joint compound, finishing products, insulation and
other specialty products to the South Florida market.
GMS Inc.
8/29/2016 L&W Supply Construction Materials L&W is one of the largest distributors of gypsum wallboard and
suspended ceiling tiles.
ABC Supply
8/29/2016 Dauenhauer Plumbing Building Products Dauenhauer Plumbing is the leading provider of maintenance and new
installation plumbing serv ices in Kentucky.
Trivest
8/29/2016 CEMEX (certain assets in
Texas and New Mexico)
Construction Materials The assets being sold by mainly consist of CEMEX’s cement plant in
Odessa, Texas, two cement terminals and the building materials business
in El Paso, Texas and Las Cruces, New Mexico.
Grupo Cementos de
Chihuahua (GCC)
8/22/2016 IDS Specialty Building
Products
Building Products Full line insulation and specialty serv ices contractor. United Subcontractors
8/22/2016 Riobel Building Products Riobel manufactures plumbing faucets and fixtures. Fortune Brands
PAGE |
REPRESENTATIVE BUILDING PRODUCTS & MATERIALS TRANSACTIONS
20
BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ JANUARY 2017
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PAGE |
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