Introduction

Harris Williams & Co. is pleased to present our Building Products and Materials Industry Update for April 2018.  This report provides commentary and analysis on current capital market trends and merger and acquisition dynamics within the global building products and materials industry. 

We hope you find this edition helpful and encourage you to contact us directly if you would like to discuss our perspective on current industry trends and M&A opportunities or our relevant industry experience.

What We're Reading

Housing Starts Edge Higher as Apartment Construction Surges1

Wall Street Journal - April 17, 2018

"U.S. housing starts increased in March but single-family home construction pulled back, which could spell continued inventory shortages and rapid price increases for buyers in the coming months.

Total housing starts increased 1.9% in March from the previous month to a seasonally adjusted annual rate of 1.319 million, the Commerce Department said Tuesday. The increase was driven by a ramp up in construction of multifamily housing. Starts for buildings with five units or more jumped 16.1% from a month earlier, even as starts for single-family homes declined 3.7%."

Read the full article here.

Construction Spending will Increase 7% in 20182

Construction Dive - April 11, 2018

"In its first-quarter construction outlook report, management and investment consultancy FMI Corporation predicts that total engineering and construction spending in 2018 will increase 7.0%, nearly double the 4.0% rise seen in 2017.

FMI also forecast that residential improvements (12.0%), single-family residential (7.0%) and office construction (9.0%) will lead spending growth in 2018, accompanied by healthcare, education, transportation and communication projects."

Read the full article here.

Remodeling Confidence Remains in Strong Territory Despite Three Point Slip3

National Association of Home Builders - April 19, 2018

"The National Association of Home Builders’ (NAHB) Remodeling Market Index (RMI) posted a reading of 57 in the first quarter of 2018, down three points from the previous quarter and back to the same level as the third quarter of 2017. The RMI has been above 50—indicating that more remodelers report market activity is higher compared to the prior quarter than report it is lower—since the second quarter of 2013.

Current market conditions decreased two points from the fourth quarter of 2017 to 58. Among its three major components, major additions and alterations waned four points to 56, minor additions and alterations increased one point to 60, and the home maintenance and repair component fell four points to 57."

Read the full article here.

Construction Employment Rises in 38 states and D.C. from March 2017 to March 20184

Building Design & Construction - April 20, 2018

"Thirty-eight states and the District of Columbia added construction jobs between March 2017 and March 2018, while 29 states added construction jobs between February and March, according to an analysis by the Associated General Contractors of America of Labor Department data released today.  Association officials said the job gains are coming amid strong private-sector demand and new public-sector investments in school and airport construction."

Read the full article here.

Construction Costs Climbed in March5

Floor Daily - April 11, 2018

"Construction costs climbed again in March, with increases for a wide range of building materials, including many that are subject to proposed tariffs that could drive prices still higher and cause scarcities, according to an analysis by the Associated General Contractors of America of Labor Department data."

Read the full article here.

Public Markets6

Median Annual Revenue Growth (2013 - 2017)

Median EBITDA Margin (2013 - 2017)

Median Free Cash Flow Generation*

*Calculated as (EBITDA - Capex)/EBITDA

Historical Stock Prives (April 30, 2013 - April 30, 2018)

 

 

Median Revenue Growth (2017 - 2018E)

Median EBITDA Margin (2017 - 2018E)

Median TEV/2018E EBITDA

Historical Median TEV/NTM EBITDA (April 30, 2013 - April 30, 2018)

Public Comparables

Building Products & Services6

Building Products Distributors6

Construction Materials6

*All Public Comparables are as of April 30, 2018.

Relevant Transactions6



Recent Transactions

To view representative Harris Williams & Co. Building Products & Materials transactions, please click here

1.Wall Street Journal
2.Construction Dive
3.NAHB
4.Building Design & Construction
5.Floor Daily
6.FactSet