Building Products & Materials Group Overview

Introduction 

Harris Williams & Co. is pleased to present our Building Products and Materials Industry Update for May 2018.  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 & Co. 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.

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What We're Reading

Housing Production Drops 3.7% But Remains Near Post-Recession High1

National Association of Home Builders (May 16, 2018)

Total housing production fell 3.7% in April to a seasonally adjusted annual rate of 1.3 million units after an upwardly revised March reading of 1.3 million, according to newly released data from the U.S. Department of Housing and Urban Development and the Commerce Department. The March report marked an 11-year high for housing production.

The April reading of 1.3 million units is the number of housing units builders would begin if they kept this pace for the next 12 months.

Read the full article here.

April Construction Jobs Up 17,000 For Post-Recession High2

Construction Dive (May 8, 2018)

Construction industry employment surged by 17,000 jobs in April, reversing March's loss of an upwardly revised 10,000 positions, the U.S. Bureau of Labor Statistics reported Friday. Since April 2017, the construction sector has added 257,000 new jobs, bringing total industry employment to 7.2 million, a post-recession high. This is still approximately 550,000 off the April 2006 prerecession peak of 7.7 million, but employment has trended up since hitting its 5.4 million low in January 2011.

Read the full article here.

Builder Confidence Climbs to 70 in May1

National Association of Home Builders (May 15, 2018)

Builder confidence in the market for newly-built single-family homes rose two points to a level of 70 in May after a downwardly revised April reading on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). This is the fourth time the HMI has reached 70 or higher this year.

“The solid May report shows that builders are buoyed by growing consumer demand for single-family homes,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La. “However, the record-high cost of lumber is hurting builders’ bottom lines and making it more difficult to produce competitively priced houses for newcomers to the market.”

Read the full article here.

Homeowners Who Remodel Will Spend An Estimated $7,893 PER HOME IN 20183

Builder Online (May 30, 2018)

The National Association of Home Builders has released its latest estimates of spending on improvements to owner-occupied homes by zip code for calendar year 2018. In the average zip code, according to these estimates, home owners who remodel will spend an average of $7,893 per home. This number varies widely by zip code; in many zip codes the average expense per improved home is under $5,500 while in many it is over $11,000.

Read the full article here.

Construction Costs Surged in April4

Floor Daily (May 10, 2018)

The cost of goods used in construction jumped in April at the fastest year-over-year rate since 2011, with ongoing increases for a wide range of building materials, including many that are subject to proposed tariffs that could drive prices still higher and cause scarcities, according to an analysis by the Associated General Contractors of America of Labor Department data.

Read the full article here.

Public Markets5

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*Calculated as (EBITDA – Capex) / EBITDA

Public Comparables5

Building Products & Services

As of May 31, 2018

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Building Products Distributors

As of May 31, 2018

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Construction Materials

As of May 31, 2018

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Relevant Transactions5

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Representative Building Products & Materials Transactions

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1.NAHB

2.Construction Dive

3.Builder Online

4.Floor Daily

5.FactSet