BUILDING PRODUCTS & MATERIALS...ProSales 4/20/2017 One of the biggest issues for construction...
Transcript of BUILDING PRODUCTS & MATERIALS...ProSales 4/20/2017 One of the biggest issues for construction...
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BUILDING PRODUCTS & MATERIALSINDUSTRY UPDATE │ APRIL 2017
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BUILDING PRODUCTS & MATERIALS GROUP OVERVIEW
1
CONTENTS
WHAT WE’RE READING
ECONOMIC UPDATE
PUBLIC MARKETS
PUBLIC COMPARABLES
M&A ACTIVITY
CONTACTS
Mike HoganManaging Director
+1 (804) 915-0104
Ryan NelsonManaging Director
+1 (804) 915-0121
Tim WebbManaging Director
+1 (804) 915-0128
Trey PackardVice President
+1 (804) 887-6017
BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ APRIL 2017
www.harriswilliams.com
INTRODUCTION
Harris Williams & Co. is pleased to present our Building Products and MaterialsIndustry Update for April 2017. This report provides commentary and analysis oncurrent 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.
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
Construction
Materials
Building
Products
Distribution &
Services has been acquired by
a portfolio company of
Select Atlanta,
Georgia
aggregates
assets of LaFarge
SA have been
acquired byhas been acquired by
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has been acquired by
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has been acquired by
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has been acquired by
has been acquired by
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has been acquired by
has been acquired by
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has been acquired by
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WHAT WE’RE READING
2
MODULAR CONSTRUCTION HELPS TO EASE LABOR SHORTAGE
BUILDER OPTIMISM DIPS IN APRIL AS POST-ELECTION OUTLOOK MODERATES
CONSTRUCTION MATERIAL COSTS IN MARCH OUTPACE CONTRACTORS' PRICING
CONSTRUCTION JOB OPENINGS POST SMALL INCREASE
AGC of America 4/13/2017
Double-digit price increases for key construction materials pushed up construction costs in March, while the pricescharged by contractors remained moderate, according to a new analysis of federal producer price data releasedtoday by the Associated General Contractors of America. Association officials urged policy makers to avoid adoptingrestrictions on international trade that would add to materials costs and potentially drive up the price of infrastructure,buildings and new homes and apartments. “Prices have jumped in recent months for diesel fuel, steel, copper,wallboard and lumber—materials essential for houses, nonresidential buildings and infrastructure projects,” said KenSimonson, the association’s chief economist.
Read the full article here.
BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ APRIL 2017
WHY YOUNG AMERICANS AREN’T GOING INTO CONSTRUCTION
Professional Builder 4/18/2017
Labor costs and worker shortages are causing headaches, but builders are finding a new quick and cost-effectiveway to construct their homes or hotels. Bloomberg reports that modular building is on the rise. Prefabricated units,called modules, are built in factories, and then shipped to the job site. These units can be stacked to form anythingfrom a single-family house to a multifamily complex. The factories use advanced robots that work faster and moreprecisely than humans. Companies such as Marriott and Champion Homes have already launched major modularconstruction projects.
Read the full article here.
NAHB 4/11/2017
The count of unfilled jobs in the construction sector increased slightly in February, after two months of lower levels ofopen positions. According to the BLS Job Openings and Labor Turnover Survey (JOLTS) and NAHB analysis, the numberof open construction sector jobs (on a seasonally adjusted basis) rose to 169,000 in February. The cycle high is 238,000,set in July of last year. The open position rate (job openings as a percent of total employment) for February increasedto 2.4%. On a smoothed twelve-month moving average basis, the open position rate for the construction sector heldsteady at 2.7%, near the cycle high.
Read the full article here.
ProSales 4/20/2017
One of the biggest issues for construction companies right now is labor. Fewer and fewer young people are enteringthe construction trades, and it’s critical business leaders find out why. Rose Quint, National Association of HomeBuilders assistant VP for survey research, analyzed results of a national poll of 18 – 25 year-olds to determine thebiggest factors keeping millennials from construction. The 63% of undecided young adults who indicated there was noor little chance they would consider a career in the trades no matter the pay were prodded about the reasons fortheir resoluteness. The two most common reasons are wanting a less physically demanding job (48%) and the beliefthat construction work is difficult (32%).
Read the full article here.
Construction Dive 4/17/2017
Builder confidence in the market for new single-family construction fell three points in April to a reading of 68 on theNational Association of Home Builders/Wells Fargo Housing Market Index, after reaching the highest level recordedsince June 2005 in March. NAHB Chairman Granger MacDonald said in a statement that, even with the decline,builders are reporting strong interest from potential homebuyers. The overall index and sub-indices held above thebreakeven mark of 50. All three HMI measures dropped off in April, with current sales conditions decreasing threepoints to 74, sales expectations for the next six months declining three points to 75, and buyer traffic dipping one pointto 52.
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 annualized rateof 0.5% in the fourth quarter of 2016, andhas increased 2.0% YoY
Current dollar GDP increased 1.0%, or $194billion in the fourth quarter to a level of$18.9 trillion
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 0.25% in the fourthquarter of 2016
Industrial production increased 0.5% inMarch after increasing 0.1% in February; it isup 1.5% YoY since March 2016
Capacity utilization for the industrial sectorfell 0.1% in February to 75.4% and is down0.2% since February 2016
Seasonally-Adjusted
Seasonally-Adjusted
(QoQ percentage change)
(Indexed to 2012)
INDUSTRY UPDATE │ APRIL 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%
Q4
2007
Q4
2008
Q4
2009
Q4
2010
Q4
2011
Q4
2012
Q4
2013
Q4
2014
Q4
2015
Q4
2016
94
96
98
100
102
104
106
108
110
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ECONOMIC UPDATE
4
PERSONAL CONSUMPTION EXPENDITURES
ECONOMIC SENTIMENT
In February, personal income increased$37.1 billion, or 4.8%, while personalconsumption expenditures (PCE)increased $7 billion, or 0.1%
Wages and salaries increased 0.5% in Q4,after increasing 0.5% in Q3
Purchases of durable goods increased1.8% in February compared to anincrease of 2.4% in January; whilepurchases of non-durable goodsincreased 0.6%, compared to adecrease of 1.0% in January
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. increased 0.6% inFebruary to 126.2, following a 0.6% increasein January
The LEI is up 3.1% YoY since February 2016
The steady rise in LEI suggests consumers’perception of the economic environmentcontinues to improve
U.S. LEI is the highest it has been sinceMarch 2006
BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ APRIL 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%
Feb-11 Feb-12 Feb-13 Feb-14 Feb-15 Feb-16 Feb-17
100
105
110
115
120
125
130
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ECONOMIC UPDATE
CONSUMER CONFIDENCE INDEX (CCI)
KEY INTEREST RATES
The Consumer Confidence Indexincreased to 125.6 in March, up from116.1 in February
Consumer confidence is currently up24.6% over the last six months, and up30.7% since March 2017
Consumers’ appraisal of currentconditions was positive in December.Those saying business conditions are“good” increased from 28.3% to 32.2%;those saying business conditions are“bad” decreased from 13.4% to 12.9%
The proportion of consumers claimingjobs are “plentiful” increased from 26.9%to 31.7%, while those claiming jobs are“hard to get” decreased from 19.9% to19.5%
The Fed has begun its policy of interestrate hikes, with two increases of 13 basispoints since December 2016
The Fed Funds rate in March was 0.79%,up 43 basis points since March 2016
BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ APRIL 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
140
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0
500
1,000
1,500
2,000
2,500
3,000
1967 1972 1977 1982 1987 1992 1997 2002 2007 2012 2017
6
ECONOMIC UPDATE
U.S. NON-RESIDENTIAL CONSTRUCTION
U.S. HOUSING STARTS
BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ APRIL 2017
Non-residential construction growthmoderated slightly, having increased1.0% since February 2015
Non-residential construction was flat fromJanuary to February, and has decreased0.3% over the last six months; however,the rolling 12-month average hasincreased steadily since July 2013
Seasonally-Adjusted Annual Rate
($ in billions)
U.S. housing starts in Q1 2017 increased0.4% over Q4 2016, and has increased9.2% YoY
The increase was driven by a 0.2%increase QoQ increase in single-familyhomes and a 0.7% increase in multi-familyhomes
Housing starts continue to rebound fromunprecedented lows reached in 2009,yet remain ~16% below the 50-yearaverage of 1.4 million starts per year
(Units in 000’s)
March 2017 Annualized Starts: 1,215
QoQ Δ: 0.4%
YoY Δ: 9.2%
Source: U.S. Census Bureau
Source: U.S. Census Bureau
50-year average
of 1,443 starts
$450
$500
$550
$600
$650
$700
$750
Non-Residential Construction 12 Mo. Rolling Avg.
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ECONOMIC UPDATE
RESIDENTIAL HOUSING SPENDING
NAHB REMODELING MARKET INDEX (RMI)
Total residential building spending for2016 was $472 billion, up 7.2% from $440billion in 2015
Residential building spending increasedat a 19.6% CAGR from 2012 to 2016
FMI projects that spending will increaseat a 4.7% CAGR from 2016 through 2020P
The Q4 RMI was 54 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 a decrease of 6.6% year-over-year in the fourth quarter
BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ APRIL 2017
2016 – 2020P CAGR: 4.7%
$253$276
$329
$375
$440$472
$497 $512 $523$541
$0
$100
$200
$300
$400
$500
$600
2011 2012 2013 2014 2015 2016 2017P 2018P 2019P 2020P
Single-family Multifamily Improvements*
*Improvements includes additions, alterations, and major replacements. It
does not include maintenance and repairs.
($ in billions)
Source: FMI Consulting
2012 – 2016 CAGR: 19.6%
Source: NAHB
Seasonally-Adjusted Annual Rate
30
35
40
45
50
55
60
65
70
Q4 2008 Q4 2010 Q4 2012 Q4 2014 Q4 2016
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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 global M&A volume in 2015, 16.2% higher than 2007’s previous peak, 2016 experiencedsome moderation, with global M&A volume essentially flat year over year
Despite flat M&A volume, valuations have remained high, with investors showing a willingness to pay up for qualityassets
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 more than $500 billion of dry powder, with the majority held in 2012-2015vintage funds
North American building products deal activity was down 6% in Q1 after being down 12% in Q4 compared to Q32016
BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ APRIL 2017
Note: Includes all building products or construction materials M&A transactions announced in the U.S. or Canada
Total Transactions: 263
YoY Change: (2.6%)
Total Transactions: 267
YoY Change: 1.5%
Total Transactions: 217
YoY Change: (18.7%)
Total Transactions: 242
YoY Change: 11.5%
Total Transactions: 234
YoY Change: (3.3%)
Q1
2011
Q1
2012
Q1
2013
Q1
2014
Q1
2015
Q1
2016
Source: Mergermarket
Q1
2017
Total Transactions: 182
YoY Change: (22.2%)
Source: Mergermarket
PAGE | 9
SELECT SECTOR OVERVIEWS & TRENDS
LUMBER AND WOOD PRODUCTS
ROOFING
WINDOWS AND DOORS
Description
Lumber, boards, beams, bolts oriented strand board, poles, shingles,
siding, and wood chips
Industry Commentary:
70% of U.S. lumber demand is driven by housing, including new
construction and remodeling
Prices strengthened throughout 2016 after their depressed levels in 2015,
but still remain lower than 2014 levels
Stable price growth points to continued recovery in the broader
construction market
Framing Lumber Composite Price Index
($ 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
is typically more sheltered than other building products markets from housing
slumps 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 0.8% during Q1 2017, following a
1.6% increase in Q4 2016. Spend for Q1 was ~$300 billion
Continued strength in home prices has increased homeowners’ equity
and demand for remodeling work, providing a strong tailwind for the
window and door industry
Leading Indicator of Remodeling Activity
($ in billions)
BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ APRIL 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
$100
$150
$200
$250
$300
$350
Q1 '13 Q1 '14 Q1 '15 Q1 '16 Q1 '17
PAGE |
$0
$10
$20
$30
$40
$50
$60
2008 2010 2012 2014 2016 2018P
SELECT SECTOR OVERVIEWS & TRENDS
10
WALLBOARD AND PLASTER
HVAC
PLUMBING FIXTURES AND FITTINGS
Description
Primarily made from gypsum, products include wallboard, plaster,
plasterboard, molding, ornamental moldings, statuary, and
architectural plasterwork
Industry Commentary:
Gypsum product demand is primarily driven by new commercial and
residential construction, as well as repair and remodel spending
Over the past two years, rising wallboard prices and cost-saving
measures have improved industry profit margins
New home inventories remain low and as demand for new homes has
grown, builders have begun increasing their stock
U.S. Wallboard Demand Outlook
($ in millions)
U.S. HVAC Demand Outlook
($ in billions)
U.S. Plumping Equipment Industry
Revenue Outlook
($ in billions)
BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ APRIL 2017
Description
Residential, commercial, and industrial heating, ventilation, air
conditioning, and refrigeration equipment
Industry Commentary:
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
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
$20
$30
$40
$50
$60
$70
2008 2010 2012 2014 2016 2018P
Source: IBIS World
Source: IBIS World
Source: IBIS World
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
2008 2010 2012 2014 2016 2018P
PAGE |
1,200 1,200 1,200 1,200 1,240 1,310 1,400 1,540
838 807 812 815 851901
9411,010
0
500
1,000
1,500
2,000
2,500
3,000
2009 2010 2011 2012 2013 2014 2015 2016Crushed Stone Sand/Gravel
SELECT SECTOR OVERVIEWS & TRENDS
11
AGGREGATES
ASPHALT
CEMENT AND CONCRETE
BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ APRIL 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
U.S. Aggregates Consumption
(values in millions of metric tons)
Description
Paving includes asphalt and tar-paving mixtures
Roofing includes roofing materials 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 and construction 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
$12,000
2008 2010 2012 2014 2016 2018P
Source: U.S. Geological Survey
Source: U.S. Energy Information Administration
Source: IBIS World
0
4,000
8,000
12,000
16,000
20,000
PAGE |
PUBLIC MARKETS
BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ APRIL 2017
12
MEDIAN TEV / 2016 EBITDA
MEDIAN REVENUE GROWTH (2016 – 2017P)
MEDIAN EBITDA MARGIN (2012 – 2016) MEDIAN EBITDA MARGIN (2016 – 2017P)
MEDIAN CAPEX / 2016 REVENUE
MEDIAN REVENUE GROWTH CAGR (2012 – 2016)
HISTORICAL STOCK PRICES (APRIL 21ST, 2012 – APRIL 21ST, 2017)
HISTORICAL MEDIAN TEV / NTM EBITDA (APRIL 21ST, 2012 – APRIL 21ST, 2017)
100
140
180
220
260 Building Products Index
Building Products Distributors Index
Construction Materials Index
S&P 500 Index
6.0x
7.0x
8.0x
9.0x
10.0x
11.0x
12.0x
13.0x
Building Products Index
Building Products Distributors Index
Construction Materials Index
S&P 500 Index
8.8%
8.1%
5.0%
Construction Materials
Building Products Distributors
Building Products
10.3%
8.8%
5.7%
Construction Materials
Building Products Distributors
Building Products
21.1%
7.6%
14.9%
Construction Materials
Building Products Distributors
Building Products
16.6%
5.6%
12.1%
Construction Materials
Building Products Distributors
Building Products
9.4x
10.9x
10.4x
Construction Materials
Building Products Distributors
Building Products
6.9%
0.7%
3.5%
Construction Materials
Building Products Distributors
Building Products
Source: FactSet
PAGE |
PUBLIC COMPARABLES
13
BUILDING PRODUCTS
BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ APRIL 2017
As of April 21, 2017
Building Products & Services
Stock Performance
Current % of 2016 TEV / EBITDA EBITDA
($ in millions except per share data) Price LTM High Mkt. Cap TEV Rev. EBITDA Margin 2016 2017E
Broader Building Products Manufacturers
Compagnie de Saint-Gobain SA $53.36 98.7% $27,323 $36,078 $41,317 $4,218 10.2% 8.6x 7.8x
LIXIL Group Corp. 25.57 94.7% 7,279 14,036 16,503 1,330 8.1% 10.6x 9.5x
James Hardie Industries PLC 16.43 94.9% 7,134 7,662 1,893 447 23.6% 17.1x 14.2x
Owens Corning 62.14 99.0% 6,933 9,195 5,677 1,089 19.2% 8.4x 8.1x
USG Corporation 31.63 91.2% 4,587 5,265 3,017 629 20.9% 8.4x 8.0x
Armstrong World Industries, Inc. 47.00 97.9% 2,517 3,347 1,235 315 25.5% 10.6x 9.5x
Continental Building Products, Inc. 24.10 90.9% 944 1,195 461 134 29.0% 8.9x 9.0x
Median 94.9% $3,017 $629 20.9% 8.9x 9.0x
Windows & Doors
ASSA ABLOY AB $21.74 96.5% $23,197 $26,345 $8,182 $1,413 17.3% 18.6x 16.8x
JELD-WEN Holding, Inc. 33.02 98.8% 3,429 4,886 3,667 394 10.7% 12.4x 10.9x
Masonite International Corp. 80.45 98.2% 2,390 2,902 1,974 253 12.8% 11.5x 9.8x
Ply Gem Holdings, Inc. 19.35 96.8% 1,300 2,111 1,912 229 12.0% 9.2x 8.2x
Quanex Building Products Corporation 20.15 92.0% 680 945 928 110 11.9% 8.6x 8.8x
Tyman Plc 4.19 97.0% 744 945 557 98 17.6% 9.6x 7.9x
PGT, Inc. 10.70 85.7% 518 750 459 76 16.5% 9.9x 8.9x
Median 96.8% $1,912 $229 12.8% 9.9x 8.9x
HVAC
Daikin Industries, Ltd. $97.85 94.7% $28,672 $31,128 $18,706 $2,797 15.0% 11.1x 10.3x
Lennox International Inc. 165.47 95.7% 7,316 8,099 3,642 521 14.3% 15.6x 13.7x
Median 95.2% $11,174 $1,659 14.6% 13.3x 12.0x
Kitchen & Bath
Masco Corporation $34.78 93.0% $10,987 $13,477 $7,357 $1,211 16.5% 11.1x 10.4x
Fortune Brands Home & Security, Inc. 63.22 98.1% 9,643 11,157 4,985 776 15.6% 14.4x 12.7x
American Woodmark Corporation 89.10 96.6% 1,419 1,266 1,036 124 11.9% 10.2x 9.1x
Caesarstone Ltd. 38.50 88.5% 1,294 1,265 539 130 24.2% 9.7x 10.3x
Median 94.8% $3,010 $453 16.0% 10.7x 10.3x
Building Envelope
Kingspan Group Plc $33.59 99.5% $5,637 $6,568 $3,304 $429 13.0% 15.3x 14.1x
Apogee Enterprises, Inc. 53.60 87.9% 1,495 1,614 1,115 159 14.3% 10.1x 8.2x
NCI Building Systems, Inc. 16.90 93.4% 1,191 1,566 1,685 166 9.9% 9.4x 8.3x
Median 93.4% $1,685 $166 13.0% 10.1x 8.3x
Install / Service
TopBuild Corp. $50.13 99.3% $1,874 $1,943 $1,743 $140 8.0% 13.9x 11.4x
Installed Building Products, Inc. 54.50 99.8% 1,698 1,862 863 105 12.2% 17.7x 12.6x
Comfort Systems USA, Inc. 35.50 89.5% 1,309 1,313 1,634 128 7.8% 10.3x 9.4x
Median 99.3% $1,634 $128 8.0% 13.9x 11.4x
Lighting
Acuity Brands, Inc. $179.73 64.0% $7,833 $7,801 $3,291 $572 17.4% 13.6x 12.8x
Hubbell Incorporated 121.24 96.3% 6,598 7,308 3,505 569 16.2% 12.9x 12.0x
Median 80.1% $3,398 $570 16.8% 13.3x 12.4x
Flooring
Mohawk Industries, Inc. $236.91 99.5% $17,456 $20,086 $8,959 $1,705 19.0% 11.8x 10.9x
Tarkett SA 44.04 97.2% 2,597 3,207 2,921 350 12.0% 9.2x 8.4x
Interface, Inc. 19.18 96.2% 1,207 1,354 959 135 14.1% 10.0x 9.1x
Armstrong Flooring, Inc. 18.82 82.0% 519 517 1,193 83 7.0% 6.2x 6.5x
Median 96.7% $2,057 $243 13.0% 9.6x 8.7x
Pipe, Valves, & Fittings
Geberit AG $441.23 98.5% $15,763 $16,740 $2,787 $787 28.2% NM NM
Georg Fischer AG 916.75 97.1% 3,658 4,004 3,739 441 11.8% 9.1x 8.7x
Mueller Industries, Inc. 34.36 78.2% 1,944 1,878 2,056 195 9.5% 9.6x NA
NORMA Group SE 52.70 92.6% 1,584 2,090 955 191 20.0% 11.0x 10.1x
Uponor Oyj Class A 18.62 97.1% 1,318 1,597 1,166 132 11.3% 12.1x 9.6x
Advanced Drainage Systems, Inc. 23.00 80.7% 1,247 1,966 1,243 198 16.0% 9.9x 9.4x
Reliance Worldwide Corp. Ltd. 2.30 86.1% 1,181 1,287 387 71 18.5% 18.0x 14.4x
Polypipe Group PLC 5.23 99.6% 1,030 1,248 546 107 19.6% 11.6x 10.6x
Median 94.8% $1,205 $193 17.2% 11.0x 9.9x
Overall Median 96.2% $1,893 $229 14.3% 10.4x 9.5x
Source: FactSet
PAGE |
PUBLIC COMPARABLES
14
BUILDING PRODUCTS DISTRIBUTORS
BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ APRIL 2017
1) Pro forma EBITDA figures from the presentation for the Rugby Architectural Building Products acquisition
As of April 21, 2017
Building Products Distributors
Stock Performance
Current % of 2016 TEV / EBITDA EBITDA
($ in millions except per share data) Price LTM High Mkt. Cap TEV Rev. EBITDA Margin 2016 2017E
Wolseley plc $6.31 97.5% $15,555 $17,553 $18,737 $1,525 8.1% 11.5x 11.2x
HD Supply Holdings, Inc. 40.25 90.0% 8,053 11,868 7,439 921 12.4% 12.9x 11.9x
Beacon Roofing Supply, Inc. 50.46 98.7% 3,034 4,107 4,127 347 8.4% 11.8x 10.8x
Builders FirstSource, Inc. 15.75 97.9% 1,729 3,577 6,367 381 6.0% 9.4x 7.9x
BMC Stock Holdings, Inc. 23.30 97.5% 1,548 1,920 3,094 192 6.2% 10.0x 8.3x
GMS Inc. 35.29 98.2% 1,434 2,091 2,310 185 8.0% 11.3x 9.6x
Richelieu Hardware Ltd 22.71 99.9% 1,308 1,315 634 71 11.2% 18.6x 16.5x
SIG plc 1.54 72.0% 891 1,234 3,462 144 4.2% 8.6x 8.3x
Foundation Building Materials, Inc. 16.29 91.0% 338 838 1,761 80 4.5% 10.5x NA
CanWel Building Materials Group Ltd. 4.45 80.7% 300 377 727 38 5.2% 10.0x 8.4x
Hardwoods Distribution Inc. 12.64 82.2% 265 314 591 34 5.8% 9.2x 7.7x
Huttig Building Products, Inc. 8.87 96.0% 232 273 710 21 3.0% 13.0x 10.1x
Overall Median 96.7% $2,702 $165 6.1% 10.9x 9.6x
Source: FactSet
PAGE |
PUBLIC COMPARABLES
15
CONSTRUCTION MATERIALS
BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ APRIL 2017
As of April 21, 2017
Construction Materials
Stock Performance
Current % of 2016 TEV / EBITDA EBITDA
($ in millions except per share data) Price LTM High Mkt. Cap TEV Rev. EBITDA Margin 2016 2017E
Aggregates and Cement
LafargeHolcim Ltd. $57.88 96.2% $35,148 $53,391 $26,615 $5,636 21.2% 9.5x 9.0x
CRH Plc 36.25 98.4% 29,034 36,546 28,588 3,308 11.6% 11.0x 9.8x
HeidelbergCement AG 95.14 92.5% 17,907 29,733 17,074 3,185 18.7% 9.3x 8.0x
Vulcan Materials Company 121.69 88.1% 16,045 18,239 3,593 966 26.9% 18.9x 15.3x
Martin Marietta Materials, Inc. 220.93 90.6% 13,709 15,747 3,577 972 27.2% 16.2x 14.2x
Eagle Materials Inc. 96.06 86.8% 4,610 4,936 1,199 414 34.5% 11.9x 9.8x
Summit Materials, Inc. 25.95 98.1% 2,711 3,206 1,488 371 25.0% 8.6x 7.6x
U.S. Concrete, Inc. 63.55 89.1% 1,001 1,405 1,168 160 13.7% 8.8x 7.1x
Median 91.5% $3,585 $969 23.1% 10.3x 9.4x
Heavy Construction Materials
Boral Limited $4.53 86.3% $5,221 $3,074 $3,122 $462 14.8% 6.7x 6.3x
Forterra, Inc. 18.59 81.7% 1,177 1,972 1,364 265 19.5% 7.4x 7.1x
Median 84.0% $2,243 $364 17.1% 7.0x 6.7x
Overall Median 89.8% $3,349 $714 20.3% 9.4x 8.5x
Source: FactSet
PAGE |
M&A TRANSACTIONS
16
BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ APRIL 2017
Announced
DateTarget Vertical Business Description Acquirer
4/18/2017 River City Building Supply Building Products
Distribution
Distributor of fasteners, fastening equipment and other critical
construction supplies.
SouthernCarlson
4/18/2017 Diversitech Building Products
Distribution
Supplier of a wide variety of products and categories including
equipment pads, condensate pumps, motors, and chemicals.
Permira Advisers
4/18/2017 Cemex (Pacific Northwest
Materials Business)
Construction Materials Consists of aggregate, asphalt and ready mix concrete operations in
Oregon and Washington.
Cadman Materials (a
subsidiary of
HeidelbergCement Group)
4/12/2017 Pental Surfaces Building Products
Distribution
Distributor of natural and engineered stone and tile. Architectural Granite &
Marble
4/11/2017 Corbett Aggregates Construction Materials Prov ider of concrete sand with approximately 401 acres of land with
over 35 million tons of proven reserves.
U.S. Concrete, Inc.
4/10/2017 Oberfields Construction Materials Manufacturer and distributor of concrete masonry and hardscape
products.
Graycliff Partners
4/6/2017 General LED Building Products &
Serv ices
Manufacturer of LED lighting products. The CapStreet Group
4/4/2017 Specialty Building Products
Div ision of I rwin Builders
Supply Corporation
Building Products &
Serv ices
Prov ider of specialty building products. Foundation Building
Materials, LLC
3/21/2017 Chelsea Building Products Building Products &
Serv ices
Designer and manufacturer of customized engineered extruded profiles
used in PVC windows and doors, cellular PVC molding, composite
cellular PVC cladding, and other specialty building products.
Aluplast
3/20/2017 Advanced Environmental
Recycling Technologies
(AERT)
Building Products &
Serv ices
Manufacturer of composite building materials. Oldecastle Architectural
3/14/2017 Binswanger Glass Building Products &
Serv ices
Full-serv ice designer, retailer, and installer of architectural glass and
aluminum products within the construction, residential, and automotive
markets.
Wingate Partners
3/13/2017 U.S. Marble Building Products
Distribution
Nationwide supplier of custom bathroom surfaces. Clio Holdings
3/9/2017 Tealstone Construction Construction Materials Market leader in commercial and residential concrete construction in
the Dallas-Fort Worth area.
Sterling Construction
Company
3/6/2017 MKM Building Supplies Building Products
Distribution
Distributor of building, timber and plumbing supplies, and stock a wide
range of products.
Bain Capital
2/28/2017 Greco Aluminum Railings Building Products &
Serv ices
Manufacturer of building railing and safety systems. CSW Industrials
2/27/2017 Surface Preparation
Technologies
Building Products &
Serv ices
Prov ider of rumble strips and related roadway safety serv ices. Branford Castle Partners
2/23/2017 BCH Holdings Building Products &
Serv ices
Mechanical contractor. Comfort Systems
2/22/2017 Atlas Lighting Products Building Products &
Serv ices
Manufacturer of high-quality LED lighting products sold into the
electrical distribution market.
LSI Industries
2/22/2017 PV Sullivan Supply Building Products
Distribution
Plumbing and heating supplier serv ing Boston and Eastern
Massachusetts.
Ferguson
2/17/2017 Mariak Industries &
Patrician Window
Coverings
Building Products
Distribution
Provider of residential and commercial window coverings as well as an
array of products and serv ices for interior design customers.
Springs Window Fashions,
LLC
Source: MergerMarket
PAGE |
M&A TRANSACTIONS
17
BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ APRIL 2017
Announced
DateTarget Vertical Business Description Acquirer
2/15/2016 Interior Logic Building Products &
Serv ices
Prov ider of turn-key design center serv ices and interior finish solutions to
residential homebuilders.
Platinum Equity, LLC
2/15/2017 Gaco Western Building Products &
Serv ices
Manufacturer of coatings for waterproofing and insulation. Firestone Building Products
Company, LLC
2/14/2017 Midwest Wholesale
Hardware
Building Products
Distribution
Leading value-added wholesale distributor of commercial and
institutional door hardware, electronic access control and security
products.
High Road Capital Partners
2/9/2017 Bentley Mills Building Products &
Serv ices
Global manufacturer of modular carpet tile, broadloom, and area rugs. Lone Star Funds
2/8/2017 Stone Forest Materials Building Products
Distribution
Distributor of hardscape and related products to landscape
professionals.
SiteOne Landscape Supply
2/7/2017 Futura Industries Building Products &
Serv ices
Designs and manufactures a wide range of extruded aluminum
products including branded flooring trims and TSLOTS.
The William L Bonnell
Company
2/6/2017 Evergreen Lumber Building Products
Distribution
Lumber distributor serv ing Washington state. Homewood Holdings
2/2/2017 Baker Brothers Building Products &
Serv ices
Market-leading provider of residential plumbing and HVAC repair and
installation serv ices.
Wrench Group
2/1/2017 Ridout Companies Building Products
Distribution
The largest privately owned building products and materials dealer in
Arkansas.
US LBM Holdings, LLC
2/1/2017 Original Cast Lighting Building Products &
Serv ices
Specializes in architectural lighting solutions for commercial and high-
end residential buildings in the United States.
Legrand
1/31/2017 Arbo Holdings Building Products &
Serv ices
Manufactures a range of sealants, coatings and other building
envelope products to the UK and European construction markets for
waterproofing and air and vapor barrier applications.
Carlisle Cos. Inc
1/31/2017 Set-Rite Building Products &
Serv ices
Manufactures a patented toilet flange spacer system that can be used
for both retrofit applications and new construction.
Oatey
1/27/2017 Arrow Tru-Line Building Products &
Serv ices
Manufacturer and supplier of critical hardware components for the U.S.
sectional overhead door market.
Sun Capital Partners, Inc.
1/25/2017 Air King Fastening Systems Building Products &
Serv ices
Offers a range nailers and industrial staplers, as well as screws and nails
in all crowns and lengths.
SouthernCarlson
1/21/2017 Aspen Valley Landscape
Supply
Building Products
Distribution
Distributor of hardscapes and landscape supplies to the professional
market.
SiteOne Landscape Supply
1/19/2017 US Floors Building Products &
Serv ices
Dalton, Georgia-based hardwood floor manufacturer. The Shaw Group
1/18/2017 Midwest Fireproofing Building Products &
Serv ices
Heavy commercial fireproofing and insulation company with locations
in Chicago and Indianapolis.
TopBuild
1/12/2017 AWP Windows & Doors Building Products &
Serv ices
The merger will create the largest window and door manufacturer in
Florida.
TM Windows
1/10/2017 United Subcontractors Building Products &
Serv ices
Prov ides insulation, specialty, and shell construction serv ices for
residential and commercial projects.
Trilantic North America
1/6/2017 Everist Materials &
Razorback Concrete
Construction Materials Owns ready-mix concrete and asphalt plants in proximity to Summit’s
existing portfolio.
Summit Materials
Source: MergerMarket
PAGE |
M&A TRANSACTIONS
18
BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ APRIL 2017
Announced
DateTarget Vertical Business Description Acquirer
1/4/2017 Binford Supply Building Products
Distribution
One of the largest residential & commercial fencing distributors in Texas,
primarily serv ing residential and commercial fencing contractors
throughout TX and OK.
U.S. Fence Solutions
1/4/2017 Tradesmen International Building Products &
Serv ices
Prov ider 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
Distribution
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 &
Serv ices
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 &
Serv ices
Manufacturer of made-to-measure kitchen doors. Sun Capital Partners, Inc.
12/15/2016 Tectum, Inc. Building Products &
Serv ices
Manufacturer of acoustical ceiling, wall and structural solutions for
commercial building applications.
Armstrong World Industries
12/15/2016 Rmax Operating Building Products &
Serv ices
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 &
Serv ices
Designer and fabricator of curtainwall systems for commercial
construction projects.
Apogee Enterprises
12/12/2016 Ray L Hellwig Plumbing &
Heating
Building Products &
Serv ices
Designer and installer of plumbing systems. Total Facility Solutions
12/7/2016 SGI, Inc. (door and drywall
div isions)
Building Products &
Serv ices
Interior Products Supply Drywall Div ision and Interior Products Supply
Door Div ision of SGI, Inc.
Clio
12/7/2016 Rosboro Building Products &
Serv ices
Manufacturer of forest products. GMS Inc.
12/6/2016 Top Master Building Products &
Serv ices
Leading regional countertop manufacturer. Wynnchurch Capital, LLC
12/6/2016 ConTech Lighting Building Products &
Serv ices
Manufacturer of high-performance and sustainable lighting solutions
and fixtures.
Lev iton
12/5/2016 Bassi Construction Ltd. Building Products &
Serv ices
Prov ider of construction serv ices. Mosaic Capital
Corporation
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 Construction Materials World's largest manufacturer of aerated concrete blocks, calcium-
silicate units, and high-performance boards.
Lone Star Funds
Source: MergerMarket
PAGE |
REPRESENTATIVE BUILDING PRODUCTS & MATERIALS TRANSACTIONS
20
BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ APRIL 2017
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PAGE |
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BUILDING PRODUCTS & MATERIALS
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