Building Products & Materials Group Overview

Introduction

Harris Williams is pleased to present our Building Products and Materials Industry Update for August 2019.  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.

Our Practice

Harris Williams is a leading advisor to the building products and materials industry. Our significant experience covers a broad range of end markets, industries, and business models.

Building Products

  • Building Envelope
  • Cabinets and Countertops
  • Decking and Siding
  • Drywall and Ceiling Tiles
  • Flooring
  • HVAC and Electrical
  • Insulation
  • Lighting
  • Lumber
  • Plumbing Fixtures
  • PVF and Water Management
  • Roofing
  • Tools and Hardware
  • Windows and Doors

Distribution & Services

  • Architectural and Engineering
  • Contracting
  • Distribution
  • Infrastructure Services
  • Installation
  • Site Development

Construction Materials

  • Aggregates
  • Asphalt
  • Brick
  • Concrete (Precast / Ready-Mix)
  • Glass
  • Industrial Minerals
  • Metals
  • Stone

Building Products

screen_shot_2019-08-22_at_4.39.52_pm.png

Distribution & Services

screen_shot_2019-08-22_at_4.40.42_pm.png

Construction Materials

screen_shot_2019-08-22_at_4.41.15_pm.png

What We’re Reading

Construction Contractors Remain Confident as Summer Begins1

Associated Builders & Contractors  7/18/2019

"U.S. construction industry leaders remained upbeat regarding nonresidential construction’s near-term prospects in May 2019, according to the Construction Confidence Index released today by Associated Builders and Contractors.

While contractors were slightly less upbeat regarding profit margins and staffing levels compared to April, all three principal components measured by the survey—sales, profit margins and staffing levels—remain well above the diffusion index threshold of 50 in May. Nearly 73% of contractors expect sales to rise during the next six months and 68% expect staffing levels to increase further."

Read the full article here.

U.S. Home Sales Stumble, as Pricey West Coast Markets Suffer Declines2

Wall Street Journal  7/23/2019

"U.S. home sales slumped in June as home prices for major West Coast cities declined for the first time since 2012, ending the spring selling season with a thud. Real-estate agents said lower asking prices could eventually attract more buyers, but home values in the Bay Area, Los Angeles and Seattle have roughly doubled over the past seven years. That means prices may have to retreat further before buyers do more than look, economists said.

Existing-home sales fell 1.7% to a seasonally adjusted annual pace of 5.27 million, the National Association of Realtors said Tuesday. Sales declined 2.2% compared with a year earlier, marking the 16th consecutive month of annual declines in sales."

Read the full article here.

U.S. Housing Starts Fell in June on Fewer Multifamily Units3

Bloomberg  7/16/2019

"U.S. new-home construction fell in June for a second month as a drop in apartment building outweighed a pickup in single-family projects.

Residential starts declined 0.9% to a 1.25 million annualized rate, the slowest in three months, according to government figures released Wednesday. Permits, a proxy for future construction, dropped 6.1% to a 1.22 million rate, also reflecting a slump in applications to build multifamily units."

Read the full article here.

The Offsite Tipping Point: What's Holding Builders Back?4

LBM Journal  7/16/2019

"Construction input prices decreased 1.3% on both a monthly and yearly basis in June, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics’ Producer Price Index data. This is the first time in nearly three years that input prices have fallen on a year-over-year basis, ABC says.

Overall, nonresidential construction input prices declined 1.4% from May 2019 but are down just 0.8% from June 2018. Among the 11 sub-categories, only natural gas (+1.6%) and concrete products (+0.9%) prices increased compared to May 2019. On a yearly basis, three of the sub-category prices have declined by more than 20%, including softwood lumber (-23.1%), crude petroleum (-22.2%) and natural gas (-22.3%)."

Read the full article here.

Housing Starts Relatively Flat Off of Strength in Multifamily Sector5

NAHB  7/16/2019

"Builder confidence in the market for newly-built single-family homes rose one point to 65 in July, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released today. This marks the sixth consecutive month that sentiment levels have held at a steady range in the low- to mid-60s.

'Builders report solid demand for single-family homes. However, they continue to grapple with labor shortages, a dearth of buildable lots and rising construction costs that are making it increasingly challenging to build homes at affordable price points relative to buyer incomes,' said NAHB Chairman Greg Ugalde, a home builder and developer from Torrington, Conn."

Read the full article here.

Public Markets6

screen_shot_2019-08-22_at_4.44.38_pm.png

Public Comparables6

Building Products

As of July 31, 2019

screen_shot_2019-08-22_at_4.46.22_pm.png

Building Products Distributors

As of July 31, 2019

screen_shot_2019-08-22_at_4.47.14_pm.png

Construction Materials

As of July 31, 2019

screen_shot_2019-08-22_at_4.47.53_pm.png

Relevant Transactions7

screen_shot_2019-08-22_at_4.48.42_pm.png

screen_shot_2019-08-22_at_4.50.19_pm.png

screen_shot_2019-08-22_at_4.50.46_pm.png

Representative Building Products & Materials Transactions

screen_shot_2019-08-22_at_4.51.26_pm.png

1. Associated Builders & Contractors

2. Wall Street Journal

3. Bloomberg

4. LBM Journal

5. NAHB

6. FactSet

7. Mergermarket

 

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.

Harris Williams LLC is a registered broker-dealer and member of FINRA and SIPC. Harris Williams & Co. Ltd is a 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 07078852). Harris Williams & Co. Ltd is authorized and regulated by the Financial Conduct Authority. Harris Williams & Co. Corporate Finance Advisors GmbH is registered in the commercial register of the local court of Frankfurt am Main, Germany, under HRB 107540. The registered address is Bockenheimer Landstrasse 33-35, 60325 Frankfurt am Main, Germany (email address: hwgermany@harriswilliams.com). Geschäftsführer/Directors: Jeffery H. Perkins, Paul Poggi. (VAT No. awaited). Harris Williams is a trade name under which Harris Williams LLC, Harris Williams & Co. Ltd and Harris Williams & Co. Corporate Finance Advisors GmbH conduct business.