Building Products & Materials Group Overview

Introduction

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

Why Home Prices Are Rising During the Pandemic1

The Wall Street Journal  5/5/2020

Home prices plunged during the last recession; however, that has not been the case so far in the current recession, with the median home price rising to $280,600 in March. Buyer demand has softened, but the decrease in the supply of housing has outpaced sales demand. “Demand absolutely just got a kick in the gut, but at the same exact time, so did supply,” said Skylar Olsen, senior principal economist at Zillow Group Inc.

Many sellers are waiting for restrictions to ease before deciding on whether or not to lower the price of a home. The market has been undersupplied for years, and the pandemic may worsen the problem.

Read the full article here.

Nonresidential Construction Employment Sees Record Loss in April, Says ABC2

The American Surveyor  5/8/2020

The construction industry lost 975,000 jobs on net in April, the largest decrease ever recorded since the government started tracking employee data back in 1939. This steep decrease comes even after the construction industry was deemed essential in much of the U.S.

“The hope had been that construction activity would hold up well given the industry’s classification as an essential industry in much of the nation and the presence of substantial backlog coming into the crisis, which stood at 8.2 months in February, according to ABC’s Construction Backlog Indicator,” said ABC Chief Economist Anirban Basu. “But alas, in large measure, those hopes were not realized.”

Read the full article here.

Drop in April Construction Input Prices Could Help Stabilize Nonresidential Construction Sector3

Associated Builders and Contractors  5/13/2020

According to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics Producer Price Index data, construction input prices fell 4.4% in April.

Given the recent capital injections into the economy by the Federal Reserve and increased federal spending, there are significant inflationary concerns. For now, however, prices remain low. This may prompt many to go forward with planned projects to reap the benefits of the cost savings as well as completing the projects in time ahead of the broader opening of the economy.

Read the full article here.

Homebuilder Sentiment Bounces Back in May, After Record Plunge in April4

CNBC  5/18/2020

Builders saw a quick rebound in interest from buyers after the record decline of the homebuilder sentiment index last month. The index rose 7 points in May to 37, which is still in negative territory below the neutral 50 threshold.

“The fact that most states classified housing as an essential business during this crisis helped to keep many residential construction workers on the job, and this is reflected in our latest builder survey,” said NAHB Chairman Dean Mon. “At the same time, builders are showing flexibility in this new business environment by making sure buyers have the knowledge and access to the homes they are seeking through innovative measures such as social media, virtual tours and online closings.”

Read the full article here.

US New-Home Sales Post Slight Gain in April5

AP News  5/26/2020

U.S. new home sales increased 0.6% in April, an indicator of potential buyer health amid the COVID-19 outbreak. Buyers are seeking to take advantage of low interest rates, and many are purchasing homes that have yet to be constructed.

Potential homeowners are taking the time in self-isolation to search for homes that will meet their needs in a post-coronavirus economy. Overall, new-home sales rose in the Northeast, Midwest and South, but slumped in the West.

Read the full article here.

Public Markets6

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*Calculated as (EBITDA – Capex) / EBITDA

Public Comparables6

Building Products

As of May 31, 2020

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Building Products Distributors

As of May 31, 2020

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Construction Materials

As of May 31, 2020

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Relevant Transactions7

Representative Building Products & Materials Transactions

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1. The Wall Street Journal

2. The American Surveyor

3. Associated Builders and Contractors

4. CNBC

5. AP News

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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