Building Products & Materials Group Overview

Introduction

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

Building Products 

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Distribution & Services 

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Construction Materials

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What We’re Reading

Construction Input Prices Down in November1

Associated Builders and Contractors  12/12/2019

Construction input prices fell 0.5% in November and have fallen 1.1% year over year according to an analysis of the U.S. Bureau of Labor Statistics’ Producer Price Index data.

Certain inputs have seen an increase in price, including concrete, which is up 3% year over year; however, with a softer international economy, many commodity prices have remained flat or fallen. Even items that have been impacted by tariffs, such as steel, have experienced a decline in price over the past year.

Read the full article here.

Construction Backlog Indicator Remains at 9 Months2

Construction Pros  12/17/2019

Associate Builders and Contractors reported that its Construction Backlog Indicator remained just shy of nine months in October, up 0.2% from the previous month.

“Many would consider a flat reading on backlog as a nonevent, yet nothing could be further from the truth,” said ABC Chief Economist Anirban Basu. “The fact that backlog did not decline is significant given all the uncertainty facing various economic decision-makers in the context of a weakening global economy, political uncertainty emerging from Washington, ongoing trade disputes, and increasingly volatile financial markets.”

Read the full article here.

U.S. Home Sales Pick Up in Second Half of the Year, Aided By Low Rates3

Wall Street Journal  12/19/2019

Existing home sales rose for the fifth consecutive month in November, up 2.7% from a year ago. Buyers are being lured into the market by low mortgage rates. Additionally, millennials are out looking for their first home, accounting for nearly half of home-purchase mortgage originations, according to Realtor.com.

New-home construction continues to come to market, but there are still not enough homes being built, especially on the lower end of the price range, to offset the current market demand.

Read the full article here.

Construction Confidence Rebounds in October4

The American Surveyor  12/19/2019

U.S. construction industry confidence increased with respect to prospects for sales and profit margins in October, according to ABC’s Construction Confidence Index. Despite rising wages and increased shortages of skilled labor, nearly half of contractors surveyed believe they will experience high profit margins over the next six months.

The U.S. construction market is entering 2020 with significant momentum. Although abundant risks still remain, such as volatile asset prices, weakening global growth, and political uncertainty, the mood amongst contractors remains upbeat.

Read the full article here.

Number of Unfilled Construction Jobs Remains High Despite Some Progress5

National Association of Home Builders  12/20/2019

Construction job openings remain well above levels from a year ago, despite a slight decline in October over the previous month. The trend of increased openings has continued since the Great Recession, driven primarily by a shortage of access to skilled labor.

Recent data suggests that the count of unfilled positions is nearing a peak in the cycle, but remains a high-priority issue to address for recruiters going forward.

Read the full article here.

Public Markets6

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*Calculated as (EBITDA – Capex) / EBITDA

Public Comparables6

Building Products

As of December 31, 2019

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Building Products Distributors

As of December 31, 2019

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Construction Materials

As of December 31, 2019

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Relevant Transactions7

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Representative Building Products & Materials Transactions

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1. Associated Builders & Contractors

2. Construction Pros

3. Wall Street Journal

4. The American Surveyor

5. National Association of Home Builders

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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