Building Products & Materials Group Overview

Introduction

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

    GDP Growth Expands Despite Reduction in Nonresidential Investment1

    Associated Builders and Contractors  10/30/2019

    The U.S. economy expanded at an annualized rate of 1.9% in the third quarter despite contracting levels of nonresidential investment, which declined at an annualized rate of 3.0%. Investment in nonresidential fixed investment structures, which is closely tied to construction, declined by 15.3% in the third quarter, and has now contracted in four of the last five quarters.

    “Recent data regarding nonresidential construction spending indicate weaker spending in categories such as office and lodging. This was reflected in today’s GDP report, which indicated that spending on structures contracted significantly during the third quarter. For the most part, nonresidential construction spending growth continues to be driven by public construction, including in categories such as water supply and public safety,” said ABC Chief Economist Anirban Basu.

    Read the full article here.

    September Construction Unemployment Rates Down in 48 States Year Over Year2

    The American Surveyor  10/30/2019

    Construction unemployment rates fell nationally and in 48 states on a year-over-year basis in September, according to an analysis of U.S. Bureau of Labor Statistics data. Rates were below 10% in all states for the fifth consecutive month. Moreover, the national NSA construction unemployment rate fell to 3.2%, the lowest September construction unemployment rate on record.

    Bernard Markstein, President & Chief Economist of Markstein Advisors, speculates that above-average temperatures and precipitation were the main drivers of construction activity variation across regions.

    Read the full article here.

    U.S. Housing Starts Fall From a 12-Year High3

    CNBC  10/17/2019

    U.S. housing starts fell from a more than 12-year high in September despite a rise in single-family starts for a fourth consecutive month. The overall market declined 9.4% to a seasonally adjusted annual rate of 1.256 million units. Housing starts were up 1.6% on a year-over-year basis.

    The sector has perked up recently, benefitting from easing monetary policy, but remains constrained by land and labor shortages. Building permits also fell 2.7% in September, but confidence amongst homebuilders remains high.

    Read the full article here.

    Falling Rates Boost Mortgage Market to Precrisis Levels4

    Wall Street Journal  10/28/2019

    Lenders extended $700B of home loans in the third quarter, the most in 14 years, according to research group Inside Mortgage Finance. Mortgage originations are also on pace to hit their highest levels since the peak of the last housing boom in 2006. Falling interest rates are the main driver behind this increased activity.

    “The last few months have given us glimmers of hope that low rates are inducing existing home sales upwards,” said Ralph McLaughlin, deputy chief economist at CoreLogic Inc. “It looks like there is a healthy runway for home sales to tick up.”

    Read the full article here.

    Builder Confidence Hits 20-Month High5

    NAHB  10/16/2019

    Builder confidence in the market for newly built, single-family homes rose to a 20-month high in October, increasing three points to 71 in the NAHB / Wells Fargo Housing Market Index (HMI).

    “The second half of 2019 has seen steady gains in single-family construction, and this is mirrored by the gradual uptick in builder sentiment over the past few months,” said NAHB Chief Economist Robert Dietz. “However, builders continue to remain cautious due to ongoing supply side constraints and concerns about a slowing economy.”

    Read the full article here.

    Public Markets6

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    *Calculated as (EBITDA – Capex) / EBITDA

    Public Comparables6

    Building Products

    As of October 31, 2019

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    Building Products Distributors

    As of October 31, 2019

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    Construction Materials

    As of October 31, 2019

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    Relevant Transactions7

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    Representative Building Products & Materials Transactions

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    1. Associated Builders and Contractors

    2. The American Surveyor

    3. CNBC

    4. Wall Street Journal

    5. NAHB

    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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