Building Products & Materials

Report - March 12, 2019

Building Products & Materials Group Overview

Introduction

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

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 Price Declines Carry into 2019¹

Associated Builders & Contractors 2/14/2019

"Construction input prices fell 0.7% on a monthly basis in January yet are up 1.6% year-over-year according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics data... Construction input prices have declined for three consecutive months and in four of the previous six months.

Seven of the 11 subcategories monitored in the data experienced price declines in January. Energy-related prices experienced the most precipitous declines, with natural gas prices falling 32.2% and unprocessed energy materials prices slipping 19%."

Read the full article here.

Home Builder Confidence Jumps in February to Four-Month High²

MarketWatch 2/19/2019

"The National Association of Home Builders’ monthly confidence index jumped four points to a seasonally adjusted reading of 62 in February, the trade group said Tuesday.

The February gain was the second in a row and put the sentiment index, which some economists view as an early read on the pace of residential construction, back to its mid-autumn level. It easily beat the Econoday consensus forecast of a one-point increase. In February, the index component that tracks views of current sales conditions rose three points to a reading of 67, and the tracker of expectations for the next six months jumped five points to 68. The measure of buyer traffic rose four points to 48. Any reading over 50 signals improvement, but the buyer traffic component is rarely above 50, even in the go-go days of the housing bubble a decade ago."

Read the full article here.

Multifamily Production Expected to Level Off in 2019³

Floor Daily 2/21/2019

"While multifamily housing starts in 2018 came very close to the sector’s 2015 peak, production levels are expected to moderate somewhat in 2019 and will stabilize in a range that that is considered normal, according to data announced by National Association of Home Builders (NAHB). 'Multifamily starts will begin to level off through 2019, edging 2.0% lower this year at about 379,000 units, approaching the level that was the pre-recession norm,' said Danushka Nanayakkara-Skillington, AVP, Forecasting and Analysis for NAHB. 'The great majority of 2018’s units were in buildings with 50 or more apartments.'

While the multifamily recovery led housing out of the recession, the single-family market has not rebounded as strongly. In addition, the rising cost of land and building materials in 2018 and the contraction in the labor force for skilled subcontractors and other construction labor has pushed the cost of a new single-family homes beyond the reach of many young families, many of whom continue to rent."

Read the full article here.

Housing Starts Down 11.2 Percent in December; Post Yearly Gain⁴

National Association of Home Builders 2/26/2019

"Housing starts fell 11.2% in December to a seasonally adjusted annual rate of 1.08 million units, according to a report from the U.S. Department of Housing and Urban Development and the Commerce Department that was delayed due to the partial government shutdown. Multifamily starts fell 20.4% to a seasonally adjusted annual rate of 320,000 units while single-family production posted a 6.7% decline to 758,000 units.

However, single-family and multifamily starts each posted a yearly gain. Single-family production was up 2.8 % in 2018 to a rate of 872,800, the highest annual figure since the Great Recession. Multifamily starts posted a 5.5% gain in 2018 to 373,700 units."

Read the full article here.

Construction Contractors Remained Upbeat Heading into 2019¹

Associated Builders & Contractors 2/21/2019

"Construction industry leaders remained predominantly confident about the nonresidential construction sector’s prospects during the final quarter of 2018, according to the latest Construction Confidence Index released today by Associated Builders and Contractors.

Sales expectations remained especially upbeat during the fourth quarter, though the proportion of contractors anticipating significant sales increases in the following two quarters dipped by five percentage points. Despite that, more than 67.0% of contractors projected rising sales, while slightly less than 12.0% expected sales to decline."

Read the full article here.