building products & materials - … · company incorporated under english law with its...

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

PAGE |

BUILDING PRODUCTS & MATERIALS GROUP OVERVIEW

1

CONTENTS

WHAT WE’RE READING

PUBLIC MARKETS

PUBLIC COMPARABLES

M&A ACTIVITY

CONTACTS

Mike HoganManaging Director

[email protected]

+1 (804) 915-0104

Ryan NelsonManaging Director

[email protected]

+1 (804) 915-0121

Trey PackardVice President

[email protected]

+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,

Georgia

aggregates

assets of LaFarge

SA have been

acquired byhas been acquired by

a division of

has been acquired by





a subsidiary of





a portfolio company ofa portfolio company of







&






mailto:[email protected]



http://www.harriswilliams.com/

PAGE |

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.



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.


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).


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.


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.


http://www.cnbc.com/2017/01/10/us-contractors-gearing-up-for-trump-spending-windfall.html

https://www.nahb.org/en/news-and-publications/press-releases/2017/01/housing-will-continue-gradual-climb-to-higher-ground-in-2017.aspx

http://www.metalconstructionnews.com/news/industry-news/construction-unemployment-rates-improve-in-38-states-year-over-year.aspx

https://www.agc.org/news/2017/01/10/seventy-three-percent-construction-firms-plan-expand-headcount-2017-contractors-0

http://www.constructiondive.com/news/west-coast-continues-to-lead-the-top-us-housing-markets/433702/

PAGE |

ECONOMIC UPDATE

3

INDUSTRIAL PRODUCTION INDEX


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)


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

PAGE |

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



(Percentage change presented on a 3-month rolling average basis)

(Indexed to 2010)

Source: Conference Board Leading Economic Index (LEI)


(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

PAGE | 5

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



Seasonally-Adjusted

(Indexed to 1985)


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

PAGE |

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



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.

PAGE |

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



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

PAGE |

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



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%


YoY Change: (2.6%)


YoY Change: 1.5%


YoY Change: (18.7%)


YoY Change: 11.5%


YoY Change: (3.3%)

Q4

2010

Q4

2011

Q4

2012

Q4

2013

Q4

2014

Q4

2015

Source: Mergermarket

Q4

2016


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


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


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)



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 |


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


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)



Description

Residential, commercial, and industrial heating, ventilation, air

conditioning, and refrigeration equipment


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


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


11

AGGREGATES

ASPHALT

CEMENT AND CONCRETE



Description

Broad category of materials such as crushed rock, manufactured sand,

natural sand, and gravel

Most-used material in the world, after water


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


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


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



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%



Building Products

19.0%

6.6%

16.3%



Building Products

14.9%

4.9%

12.7%



Building Products

6.5%

1.0%

3.1%



Building Products

9.6x

9.9x

9.9x



Building Products

PAGE |

PUBLIC COMPARABLES

13

BUILDING PRODUCTS



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



1) Pro forma EBITDA figures from the presentation for the Rugby Architectural Building Products acquisition



Stock Performance



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


PAGE |

PUBLIC COMPARABLES

15

CONSTRUCTION MATERIALS





Stock Performance



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


PAGE |

M&A TRANSACTIONS

16



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



Announced


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



Announced


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








has been acquired by has been acquired by



Select Atlanta, Georgia aggregates assets of LaFarge SA have been acquired

by


has purchased certain assets of






a subsidiary of


A Private Investor Group

a subsidiary of





has sold certain assets to







a portfolio company ofhas been acquired by





a division of

have been acquired by

The Wichita, Kansas aggregates, concrete,

asphalt, and paving assets

of LaFarge SA


has completed a balance sheet

restructuring and recapitalization

transaction

Strategic

Industries, LLC

Private Investors






a division of


portfolio companies of


Dyad Partners



a division of



a subsidiary of




a division of



a division of






















&








http://colonialwebb.com/

http://colonialwebb.com/

http://www.essroc.com/default.aspx?pageid=36

http://www.essroc.com/default.aspx?pageid=36

http://www.dealsource.com/images/splogo.gif

http://www.dealsource.com/images/splogo.gif

PAGE |

Energy, Power& Infrastructure

IndustrialsHealthcare & Life Sciences

Transportation & Logistics

Aerospace, Defense & Government

Services

Business Services

Building Products & Materials

Technology, Media & Telecom

Specialty Distribution

Consumer

HARRIS WILLIAMS & CO. OFFICE LOCATIONS

UNITED STATES EUROPE

NETWORK OFFICES

Beijing

Hong Kong

Mumbai

New Delhi

Shanghai

BostonOne International PlaceSuite 2620Boston, Massachusetts 02110Phone: +1 (617) 482-7501

Cleveland1900 East 9th Street20th FloorCleveland, Ohio 44114Phone: +1 (216) 689-2400

Minneapolis222 South 9th StreetSuite 3350Minneapolis, Minnesota 55402Phone: +1 (612) 359-2700

Richmond (Headquarters)1001 Haxall Point9th FloorRichmond, Virginia 23219Phone: +1 (804) 648-0072

San Francisco575 Market Street31st FloorSan Francisco, California 94105Phone: +1 (415) 288-4260

Washington, D.C. 800 17th St. NW2nd FloorWashington, D.C. 20006Phone: +1 202-207-2300

FrankfurtBockenheimer Landstrasse 33-3560325 FrankfurtGermanyPhone: +49 069 3650638 00

London63 Brook StreetLondon W1K 4HS, EnglandPhone: +44 (0) 20 7518 8900

Building Products & Materials

Harris Williams & Co. has a broad range of industry expertise, which creates powerful opportunities.Our clients benefit from our deep-sector experience, integrated industry intelligence andcollaboration across the firm, and our commitment to learning what makes them unique. For moreinformation, visit our website at www.harriswilliams.com/industries.

OUR FIRM



21

PAGE |

HARRIS WILLIAMS & CO.

21



DISCLOSURES

SOURCES

Harris Williams & Co. (www.harriswilliams.com) is a preeminent middle market investment bank focused on the advisory needs of clients worldwide. The firm has deep industry knowledge, global transaction expertise, and an unwavering commitment to excellence. Harris Williams & Co. provides sell-side and acquisition advisory, restructuring advisory, board advisory, private placements, and capital markets advisory services.

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 limited company 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 and Wales (registration number 7078852). Harris Williams & Co. Ltd is authorized and regulatedby the Financial Conduct Authority. Harris Williams & Co. is a trade name under which Harris Williams LLC and Harris Williams & Co. Ltd conductbusiness.

THIS REPORT MAY CONTAIN REFERENCES TO REGISTERED TRADEMARKS, SERVICE MARKS AND COPYRIGHTS OWNED BY THIRD-PARTY INFORMATION PROVIDERS. NONE OF THE THIRD-PARTY INFORMATION PROVIDERS IS ENDORSING THE OFFERING OF, AND SHALL NOT IN ANY WAY BE DEEMED AN ISSUER OR UNDERWRITER OF, THE SECURITIES, FINANCIAL INSTRUMENTS OR OTHER INVESTMENTS DISCUSSED IN THIS REPORT, AND SHALL NOT HAVE ANY LIABILITY OR RESPONSIBILITY FOR ANY STATEMENTS MADE IN THE REPORT OR FOR ANY FINANCIAL STATEMENTS, FINANCIAL PROJECTIONS OR OTHER FINANCIAL INFORMATION CONTAINED OR ATTACHED AS AN EXHIBIT TO THE REPORT. FOR MORE INFORMATION ABOUT THE MATERIALS PROVIDED BY SUCH THIRD PARTIES, PLEASE CONTACT US.

The information and views contained in this report were prepared by Harris Williams & Co. (“Harris Williams”). It is not a research report, as such term is defined by applicable law and regulations, and is provided for informational purposes only. It is not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any financial instruments or to participate in any particular trading strategy. The information contained herein is believed by Harris Williams to be reliable, but Harris Williams makes no representation as to the accuracy or completeness of such information. Harris Williams and/or its affiliates may be market makers or specialists in, act as advisers or lenders to, have positions in and effect transactions in securities of companies mentioned herein and also may provide, may have provided, or may seek to provide investment banking services for those companies. In addition, Harris Williams and/or its affiliates or their respective officers, directors and employees may hold long or short positions in the securities, options thereon or other related financial products of companies discussed herein. Opinions, estimates and projections in this report constitute Harris Williams’ judgment and are subject to change without notice. The financial instruments discussed in this report may not be suitable for all investors, and investors must make their own investment decisions using their own independent advisors as they believe necessary and based upon their specific financial situations and investment objectives. Also, past performance is not necessarily indicative of future results. No part of this material may be copied or duplicated in any form or by any means, or redistributed, without Harris Williams’ prior written consent.

Copyright© 2017 Harris Williams & Co., all rights reserved.

Bloomberg

Builder Online

Building Design & Construction

Building-Products.com

Bureau of Economic Analysis

CityLab

Concrete Construction

Conference Board

Construction Dive

Dodge Data & Analytics

Eurostat

Federal Reserve

Floor Daily

FMI Consulting

Fortune

Freedonia

Global Industry Analysts

IBIS

Metal Construction

NAHB

New York Times

PNC Economic Outlook

Remodeling

S&P Leveraged Commentary & Data

The Wall Street Journal

Thomson Financial – SDC Database

Thomson Reuters

U.S. Census Bureau

U.S. Energy Information Administration

U.S. Geological Survey

http://www.harriswilliams.com/

building products & materials - … · company incorporated under english law with its...

Documents