Building Products & Materials Group Overview

Introduction

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

New Home Sales Plunge 15.4% in March as Virus Hits1

Associated Press  4/23/2020

U.S. new home sales plunged 15.4% in March as a winding down in the middle of the month due to the coronavirus began to rattle the housing market. The Commerce Department reported Thursday that sales of new single-family homes dropped to a seasonally adjusted annual rate of 627,000 last month after sales had fallen 4.6% in February.

The decline was expected, though economists say it will grow much worse as the country struggles with a shutdown that has thrown millions of people out of work and disrupted wide swaths of the economy. The median price for a new home sold in March was $321,400, down 2.6% from a median price of $330,100 in February.

Read the full article here.

Construction Contractor Confidence Plummets in Response to COVID-192

Associated Builders and Contractors  4/23/2020

"Confidence among U.S. construction industry leaders plummeted in response to the economic fallout associated with COVID-19, according to the Associated Builders and Contractors Construction Confidence Index released today. Readings for sales, profit margins and staffing levels expectations fell below the threshold of 50 for the first time in the history of the series, signaling expected contraction along all three dimensions. CCI is based on a survey of ABC members, which was conducted March 20-31."

"Fewer than 30% of survey respondents expected their sales to increase over the next six months, while less than 20% of contractors expected their profit margins to increase. More than one in five contractors expect a significant decrease in profit margins, while one in four expect a significant decline in sales volumes."

Read the full article here.

Residential Construction is Bright Spot in Jobs Report, but More Workers Start to Stay Home3

CNBC  4/3/2020

"Construction has been deemed essential by the federal government, but a growing number of residential construction workers are pulling back, worried about catching the coronavirus. While overall construction employment fell in March, according to the Bureau of Labor Statistics, residential construction added 2,000 jobs. It remains to be seen how long that will last."

"In its second weekly survey of residential homebuilders, conducted from March 24 to March 31, the National Association of Home Builders found 64% of respondents cited problems with the willingness of workers and subs to report to a construction site up from 42% a week earlier."

Read the full article here.

Coronavirus Causing Home Owners to Pull Back on Remodeling4

National Association of Home Builders  4/23/2020

"A recent NAHB survey of professional remodelers shows the negative effect the coronavirus pandemic is having on the decision to remodel. More than 90% of remodelers in the survey reported a slowdown in both the rate at which inquiries are coming in, and in the general willingness of home owners to remodel at this time."

"While 96% of remodelers said the virus was hurting the rate at which inquiries are coming in, a full 70% characterized the negative impact on inquiries as major rather than minor."

Read the full article here.

The New Normal: 8 Ways the Coronavirus Crisis is Changing Construction5

The American Surveyor  4/30/2020

"In the span of two months, the coronavirus crisis has demanded sweeping changes from the U.S. construction industry, and experts say many of them will remain in place even after the outbreak recedes. As contractors prepare to return to work on sites that have been shut down by shelter-in-place initiatives, they will face an industry that has been drastically changed by both the public health and economic effects of the pandemic ... From a renewed emphasis on jobsite safety to longer project delivery times and the increased influence of organized labor, the virus has upended many facets of the industry. Companies that try to return to a business-as-usual mentality will face a harsh new reality."

Read the full article here.

Public Markets6

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Public Comparables6

Building Products

As of April 30, 2020

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Building Products Distributors

As of April 30, 2020

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Construction Materials

As of April 30, 2020

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Relevant Transactions7

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Representative Building Products & Materials Transactions

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1. Associated Press

2. Associated Builders and Contractors

3. CNBC

4. National Association of Home Builders

5. Construction Dive

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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