Building Products & Materials Group Overview

Introduction

Harris Williams is pleased to present our Building Products and Materials Industry Update for August 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

Builder Confidence Remains Firm In August1

National Association of Home Builders  8/15/2018

"Builder confidence in the market for newly-built single-family homes edged down one point to a solid 67 reading in August on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI).

“The good news is that builders continue to report strong demand for new housing, fueled by steady job and income growth along with rising household formations,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La. “However, they are increasingly focused on growing affordability concerns, stemming from rising construction costs, shortages of skilled labor and a dearth of buildable lots.”"

Read the full article here.

Construction Employment Rises In 45 States And D.C. From July 2017 to July 20182

Associated General Contractors of America  8/17/2018

"Forty-five states and the District of Columbia added construction jobs between July 2017 and July 2018, while 29 states and D.C. added construction jobs between June and July, according to an analysis by the Associated General Contractors of America of Labor Department data released today. Association officials cautioned that continued job gains may depend on swiftly implementing new training and education legislation to equip students and workers to enter the industry.

“Construction job gains over the past year were more widespread across the country than at any time since the beginning of 2016,” said chief economist Ken Simonson. “These results show that contractors are still optimistic about future construction activity. But it will be hard to sustain the increases unless more students learn of these opportunities and receive appropriate training.”"

Read the full article here.

July Construction Starts Down 9.0%3

Construction Dive  8/23/2018

"Following robust increases in the value of new construction starts in May and June, 14.0% and 11.0% respectively, July starts dropped 9.0% to a seasonally adjusted annual rate of $817 billion, according to the latest report from Dodge Data & Analytics. This contraction forced the Dodge Momentum Index down to a reading of 173 from a 2018 high of 190 in June."

Read the full article here.

Construction Sector Is 'Strong' And Mortgage Rates Are Up4

Floor Daily  8/6/2018

"One sector that is solid and may be trying to move to strong is construction. Payrolls rose 19,000 in July which compared to July last year and tracked in the blue line is up 4.4 percent for the best growth since April 2016. The green line is construction spending which, though uneven this year, was up a yearly 6.1 percent in data for June."

Read the full article here.

New-Home Sales Down 1.7% In July5

Builder Online  8/23/2018

"Sales of new single-family houses in July fell 1.7% from June to a seasonally adjusted annual rate of 627,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. The July rate was 12.8% above the July 2017 estimate of 556,000."

Read the full article here.

Public Markets6

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*Calculated as (EBITDA – Capex) / EBITDA

Public Comparables6

Building Products & Services

As of August 31, 2018

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Public Comparables6

Building Products Distributors

As of August 31, 2018

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Construction Materials

As of August 31, 2018

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Relevant Transactions6

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Representative Building Products & Materials Transactions

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1. NAHB

2. Associated General Contractors of America

3. Construction Dive

4. Floor Daily

5. Builder Online

6. Factset

The information and views contained in this report were prepared by Harris Williams LLC (“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 securities or 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 securities and 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.

 

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