Building Products & Materials Group Overview

Introduction

Harris Williams is pleased to present our Building Products & Materials Industry Update for January 2021.  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

2021 Outlook: 6 Trends that Will Influence Construction this Year1

Construction Dive  1/4/2021

With subs being squeezed, contractors will surely be challenged to hire enough workers, even in-house, when the pent-up demand of mothballed projects are put back into the marketplace once the pandemic is brought under control. At the same time, observers  say companies aren’t doing so yet, since many new projects still aren’t coming to market given the explosion of coronavirus cases going into 2021.

“We do see pent-up demand sitting out there as we end out 2020 and come into 2021,” said Michelle Meisels, Deloitte’s engineering and construction practice leader.  

Read the full article here.

Construction’s December Jobless Rate Jumps Despite 51K Job Gain2

Engineering News-Record  1/8/2021

Construction’s December unemployment rate rose sharply to 9.6% from the year-earlier 5%, although the industry added 51,000 jobs during the month, the Bureau of Labor Statistics has reported.

Ken Simonson, the Associated General Contractors of America’s chief economist, said in a statement, “December’s employment gains likely reflect milder weather than usual for the month rather than sustained demand for projects.”

Read the full article here.

Monthly Construction Input Prices Increase in December3

Associated Builders & Contractors  1/15/2021

Construction input prices increased 1.8% in December 2020 compared to the previous month, 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 rose 2.1% for the month.

“A growing number of nonresidential contractors are expressing concern regarding a spike in materials prices expected later this year,” said ABC Chief Economist Anirban Basu. “They are right to be concerned.”

Read the full article here.

U.S. Housing Starts, Building Permits Accelerate4

CNBC  1/21/2021

U.S. homebuilding and permits surged in December as historically low mortgage rates supported the housing market. Momentum could slow, however, amid surging lumber prices and a shortage of labor. Housing starts jumped 5.8% to a seasonally adjusted annual rate of 1.669 million units last month.

“Permits for future homebuilding accelerated 4.5% to a rate of 1.709 million units in December. Permits, which typically lead starts by one to two months, totaled 1.452 million last year, a 4.8% increase from 2019.”

Read the full article here.

Lumber Buyers ‘Pay Up or Run Out’ Amid U.S. Homebuilding Surge5

Bloomberg  1/28/2021

With U.S. lumber prices at fresh record highs, construction companies and wood wholesalers are buying just enough to get by, threatening to make price swings even bigger.

“Everyone knows that current prices are stupid, but the choice is either pay up or run out,” Vince Bulic, president of Vancouver-area Yaletown Lumber Industries Ltd., said in a Jan. 22 note. “Comfortable prices do not seem to be on the near-term horizon.”

Read the full article here.

Public Markets6

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*Calculated as (EBITDA – Capex) / EBITDA

Public Comparables6

Building Products

As of January 31, 2021

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Building Products Distributors

As of January 31, 2021

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Construction Materials

As of January 31, 2021

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Relevant Transactions7

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Representative Building Products & Materials Transactions

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1. Construction Drive

2. Engineering News-Record

3. Associated Builders & Contractors

4. CNBC

5. Bloomberg

6. Capital IQ

7. Mergermarket