Building Products & Materials Group Overview

Introduction

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

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What We’re Reading

Lower Mortgage Rates Boost U.S. Housing Starts, Building Permits1

Reuters  11/19/2019

"U.S. homebuilding rebounded in October and permits for future home construction jumped to a more than 12-year high, pointing to strength in the housing market amid lower mortgage rates... 'It is cheaper than ever to finance the cost of a new home and home builders are sitting up and taking notice assuming that if they build it, buyers will come,' said Chris Rupkey, chief economist at MUFG in New York. 'There won’t be a recession if residential housing construction has anything to say about it.'"

Read the full article here.

Single-Family Construction Continues to Make Steady Gains in October2

NAHB  11/19/2019

"Total housing starts increased 3.8% in October to a seasonally adjusted annual rate of 1.31 million units, according to a report from the U.S. Housing and Urban Development and Commerce Department. The October reading of 1.31 million starts is the number of housing units builders would begin if they kept this pace for the next 12 months. Within this overall number, single-family starts increased 2.0% to 936,000 units. The multifamily sector, which includes apartment buildings and condos, increased 8.6 percent to a 378,000 pace."

Read the full article here.

Construction Input Prices Unchanged in October3

Associated Builders & Contractors  11/14/2019

"Construction input prices remained unchanged on a monthly basis in October but are down 2.2% year-over-year, according to an Associated Builders and Contractors analysis of the U.S. Bureau of Labor Statistics’ Producer Price Index data released today. Nonresidential construction input prices fell 0.1% for the month and are down 2.0% compared to the same time last year. Falling energy prices accounted for much of the year-over-year price decline. Among the eight subcategories that decreased, the most significant were in natural gas (-31.8%), crude petroleum (-29.8%) and unprocessed energy materials (-26.3%). Monthly natural gas prices, however, were up 7.7% from September, likely due in part to seasonal factors. Two other subcategories had year-over-year decreases greater than 10%: iron and steel (-16.1%) and steel mill products (-13.1%)."

Read the full article here.

Builder Confidence Dips Slightly in November4

LBM Journal  11/18/2019

"Builder confidence in the market for newly-built single-family homes edged one point lower to 70 in November, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The past two months mark the highest sentiment levels in 2019. 'Single-family builders are currently reporting ongoing positive conditions, spurred in part by low mortgage rates and continued job growth,' said NAHB Chairman Greg Ugalde, a home builder and developer from Torrington, Conn. 'In a further sign of solid demand, this is the fourth consecutive month where at least half of all builders surveyed have reported positive buyer traffic conditions.'”

Read the full article here.

US New Home Sales Fall in October; September Revised Higher5

CNBC  11/26/2019

"Sales of new U.S. single-family homes unexpectedly fell in October following recent strong gains, but the overall housing market remains supported by lower mortgage rates. The Commerce Department said on Tuesday new home sales dropped 0.7% to a seasonally adjusted annual rate of 733,000 units last month, held down by decreases in activity in the South and Northeast regions. September’s sales pace was revised higher to 738,000 units, the highest since July 2007, from the previously reported 701,000 units. Economists polled by Reuters had forecast new home sales, which account for about 11.3% of housing market sales, would increase 1.1% to a pace of 709,000 units in October." 

Read the full article here.

Public Markets6

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Public Comparables6

Building Products

As of November 30, 2019

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Building Products Distributors

As of November 30, 2019

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Construction Materials

As of November 30, 2019

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Relevant Transactions7

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Representative Building Products & Materials Transactions

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1. Reuters

2. NAHB

3. Associated Builders & Contractors

4. LBM Journal

5. CNBC

6. Capital IQ

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.

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