Building Products & Materials Group Overview

Introduction

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

Building Products

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Distribution & Services

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Construction Materials

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What We’re Reading

ABC’s Construction Backlog Indicator Surges in March1

Associated Builders & Contractors  5/23/2019

"Associated Builders and Contractors reports that its monthly Construction Backlog Indicator expanded to 9.5 months in March 2019, up 0.7 months or 8.8% since February 2019 when CBI stood at 8.8 months.

“The U.S. economy has been humming and construction backlog is correspondingly elevated,” said ABC Chief Economist Anirban Basu. “While there was a period of weakness in backlog in January, those dynamics, which may very well be seasonal, are no longer affecting the market. The U.S. economy’s strong first quarter appears to have greenlighted more construction projects, translating into ongoing and meaningful increases in construction backlog."

Read the full article here.

U.S. New-Home Sales Fell in April2

The Wall Street Journal  5/23/2019

"New-home sales in the U.S. declined in April, posting the largest monthly drop since the end of last year, but there are signs the market for new homes is brightening.

Purchases of newly built single-family homes—a relatively narrow slice of all U.S. home sales—declined 6.9% to a seasonally adjusted annual rate of 673,000 in April, the Commerce Department said Thursday. This was the largest month-on-month drop since December of last year. Economists polled by The Wall Street Journal had expected a smaller 2.7% drop. New-home sales declined in all regions but the Northeast, with purchases in the Midwest and West notching the biggest monthly drops since December 2018."

Read the full article here.

Housing Starts Rose 5.7% in April3

Floor Daily  5/16/2019

"Privately‐owned housing starts in April were at a seasonally adjusted annual rate of 1,235,000, 5.7% above the revised March estimate of 1,168,000 but 2.5% below the April 2018 rate of 1,267,000, according to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. Single‐family housing starts in April were at a rate of 854,000; this is 6.2% above the revised March figure of 804,000. The April rate for units in buildings with five units or more was 359,000."

Read the full article here.

Builder Confidence Posts Solid Gain in May4

National Association of Home Builders  5/15/2019

"Builder confidence in the market for newly-built single-family homes rose three points to 66 in May, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released today. Builder sentiment is at its highest level since October 2018.

“Builders are busy catching up after a wet winter and many characterize sales as solid, driven by improved demand and ongoing low overall supply,” said NAHB Chairman Greg Ugalde, a home builder and developer from Torrington, Conn. “However, affordability challenges persist and remain a big impediment to stronger sales.”"

Read the full article here.

Building Materials Prices Edge Higher in April5

LBM Journal  5/9/2019

"Prices paid for goods used in residential construction increased 0.8% in April (not seasonally adjusted) according to the latest Producer Price Index (PPI) released by the Bureau of Labor Statistics. Prices have risen more quickly thus far in 2019 (+3.2%) than they did during the same period in 2018 (+2.8%) and are at their highest level since last October.

Consistent with weekly data published by Random Lengths, the PPI report shows that softwood lumber prices declined in April. After climbing 0.5% in March, prices paid for softwood lumber decreased 1.4% over the prior month. While the PPI for softwood lumber has fallen 12.6% over the last 12 months, 95.0% of that decline occurred in 2018."

Read the full article here.

Public Markets6

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*Calculated as (EBITDA – Capex) / EBITDA

Public Comparables6

Building Products

As of May 31, 2019

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Building Products Distributors

As of May 31, 2019

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Construction Materials

As of May 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. The Wall Street Journal
3. Floor Daily
4. National Association of Home Builders
5. LBM Journal
6. FactSet
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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