Building Products & Materials Group Overview

Introduction

Harris Williams is pleased to present our Building Products & Materials Industry Update for December 2020.  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

Lumber Defies Usual Lull with Building Boom Straining Supply1

Bloomberg  12/14/2020

Lumber prices typically hit a lull in December, but not this year as lean inventories and strong building demand force buyers to pay up. Futures in Chicago touched a record high $845 per thousand board feet on Tuesday, surpassing the previous peak reached in August. Prices have been buoyed by unexpected demand from home renovations and building as people invested in their houses during the pandemic lockdowns.

“The prices have gone through the roof,’ said Vince Bulic, president of Yaletown Lumber Industries Ltd., a distributor in Vancouver. “The only way they can ration supply is to increase prices. It’s hand-to-mouth buying more than anything else.”

Read the full article here.

ABC’s 2021 Construction Economic Forecast: Recovery Shape Forms a “W”2

Associated Builders and Contractors  12/15/2020

Associated Builders and Contractors' Chief Economist Anirban Basu forecasts a recession threat for the construction sector next year, but has illuminated some potential economic bright spots, such as e-commerce and Class B office space, according to a 2021 economic outlook published in Construction Executive magazine.

“Another recession may be on the horizon,” Basu said. “Critically, one could occur even if a further stimulus is passed. Stimulus supports the demand side of the economy, primarily.”

Read the full article here.

Construction Sites Worldwide Attempt to Harness Automated Tech3

CNBC  12/15/2020

Infrastructure giant Balfour Beatty is to expand its deployment of technology that can manage power use at its sites and, it’s hoped, cut carbon emissions in the process.

In a statement Monday, Balfour Beatty said the system worked by “controlling and reducing the energy output from key appliances       in cabins, such as those in kitchens, drying rooms and office spaces.” The tech, it added, had been “configured to autonomously manage power demand by automatically turning appliances and equipment off when not in active use.”

Read the full article here.

Dodge Data & Analytics Expects Construction Starts to Recover in 20214

SDC Executive  12/18/2020

Dodge Data & Analytics released its 2021 Dodge Construction Outlook, a mainstay in construction industry forecasting and business planning. The report predicts that total U.S. construction starts will increase 4% in 2021, to $771 billion.

“The COVID-19 pandemic and recession have had a profound impact on the U.S. economy, leading to a deep drop-off in construction starts in the first half of 2020,” stated Richard Branch, Chief Economist for Dodge Data & Analytics. “While the recovery is underway, the road to full recovery will be long and fraught with potential potholes.”

Read the full article here.

Mortgage Rates Move Slightly Higher but Remain Near Record Lows5

The Washington Post  12/31/2020

After tumbling to historic lows throughout the month, the 30-year fixed mortgage rate rebounded slightly heading into the new year.

”The confirmation of a trade deal between the European Union and the United Kingdom as well as the long-awaited passage of a new round of fiscal stimulus in the U.S. were both met with modest movements in bond yields, helping mortgage rates stay put at their all-time lowest levels,” said Matthew Speakman, a Zillow economist.

Read the full article here.

Public Markets6

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*Calculated as (EBITDA – Capex) / EBITDA

Public Comparables6

Building Products

As of December 31, 2020

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Building Products Distributors

As of December 31, 2020

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Construction Materials

As of December 31, 2020

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Relevant Transactions7

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Representative Building Products & Materials Transactions

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1. Bloomberg

2. Associated Builders and Contractors

3. CNBC

4. SDC Executive

5. The Washington Post

6. Capital IQ

7. Mergermarket