Building Products & Materials Group Overview

Introduction

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

  • 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

Builder Confidence Surges in June1

National Association of Homebuilders  6/16/2020

"Housing clearly shows signs of momentum as challenges and opportunities exist in the single-family market. Builders report increasing demand for families seeking single-family homes in inner and outer suburbs that feature lower density neighborhoods.  At the same time, elevated unemployment and the risk of new, local virus outbreaks remain a risk to the housing market."

"All the HMI indices posted gains in June. The HMI index gauging current sales conditions jumped 21 points to 63, the component measuring sales expectations in the next six months surged 22 points to 68 and the measure charting traffic of prospective buyers vaulted 22 points to 43."

Read the full article here.

Homebuyer Mortgage Demand Spikes to 11-Year High, As Rates Hit Another Record Low2

CNBC  6/17/2020

"Mortgage applications to purchase a home rose 4% last week from the previous week and were a remarkable 21% higher than one year ago, according to the Mortgage Bankers Association’s seasonally adjusted index. That was the ninth consecutive week of gains and the highest volume in more than 11 years."

"'The housing market continues to experience the release of unrealized pent-up demand from earlier this spring, as well as a gradual improvement in consumer confidence,' said MBA economist Joel Kan."

Read the full article here.

Housing Recovery Is Still on the Drafting Board3

The Wall Street Journal  6/17/2020

"The housing-starts figures seemed a bit out of step with what other housing data have been showing. On Tuesday, the National Association of Home Builders said that its measure of builder sentiment registered its largest jump ever this month."

"In the housing boom and bust of the 2000s, home builders got a painful lesson in what can happen when optimism runs ahead of reality. It isn’t a mistake they are likely to repeat now."

Read the full article here.

Commercial Construction Index, Confidence in Future Revenue Plummet4

Construction Dive  6/23/2020

"The USG + U.S. Chamber of Commerce Commercial Construction Index plummeted from 74 to 56 from the first to second quarter of 2020."

"At the same time, contractors remain confident about their ability to keep workers employed. Nearly a third of respondents said they plan to hire more workers in the next six months, while 48% said they believe the workforce will stay around the same. Only 15% said they expect to have fewer employees."

Read the full article here.

U.S. Pending Home Sales Jump a Record 44.3% in May5

Thomson Reuters  6/29/2020

"The National Association of Realtors said on Monday its Pending Home Sales Index, based on contracts signed last month, surged 44.3% last month, the largest increase since the series started in 2001, to 99.6."

"In May, contracts soared 43.3% in the populous South. They jumped 56.2% in the West and increased 44.4% in the Northeast. Contracts rose 37.2% in the Midwest."

Read the full article here.

Public Markets6

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*Calculated as (EBITDA – Capex) / EBITDA

Public Comparables6

Building Products

As of June 30, 2020

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Building Products Distributors

As of June 30, 2020

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Construction Materials

As of June 30, 2020

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Relevant Transactions7

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Representative Building Products & Materials Transactions

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1. National Association of Homebuilders

2. CNBC

3. The Wall Street Journal

4. Construction Dive

5. Thomson Reuters

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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