Building Products & Materials Group Overview

Introduction

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

Nonresidential Construction Employment Expands in September, Says ABC1

The American Surveyor  10/2/2020

The construction industry added 26,000 jobs on net in September, according to an Associated Builders and Contractors analysis of data from the U.S. Bureau of Labor Statistics. This brings the total jobs added over the last five months to 689,000, or roughly 65% of the total jobs lost since the onset of the pandemic.

Anecdotal information suggests that competition for new projects continues to increase. A new stimulus package with a significant infrastructure component could help offset this problem; however, Congress continues to delay, and high positivity rates prevent the economy from fully reopening at the moment, which may constrain the labor market in the coming months.

Read the full article here.

ABC’s Construction Backlog Slips in September; Contractors Remain Optimistic2

Associated Builders and Contractors  10/13/2020

ABC’s Construction Backlog Indicator fell to 7.5 months in September, declining 0.5 months from last month’s reading. The backlog is also 1.5 months lower than this time last year.

“ABC’s survey data indicate that we are in the early stages of a nonresidential construction spending downturn,” said ABC Chief Economist Anirban Basu. “With few exceptions, declines in backlog have begun to accelerate across all markets and regions. This has been most pronounced in the West, which is largely a reflection of the many challenges facing California’s economy.”

Read the full article here.

Homebuilder Sentiment Sets Another Record High in October3

CNBC  10/19/2020

Homebuilder sentiment jumped to 85 in October, setting a record high for the second straight month. Additionally, all three
component –  sales conditions, sales expectations, and buyer traffic – either set records or matched their previous record highs.

Demand is strong as interest rates remain at record-low levels and the pandemic pushes individuals to rethink the concept of the “home.” However, it has become increasingly difficult to meet this demand as labor shortages and input constraints lengthen construction times.

Read the full article here.

U.S. Home Sales Rise to New 14-Year High, Offering Boost to Economy4

The Wall Street Journal  10/22/2020

Home sales rose to a new 14-year high in September, highlighting the housing market as a bright spot in the U.S. economy as demand remains elevated. Existing home sales rose to a seasonally adjusted annual rate of 6.54 million, a 20.9% increase year-over-year.

Record-low interest rates, a large population of millennials entering the market, and a desire for more household space are some of the key contributors to this rise. As this demand persists, insufficient supply continues to put upward pressure on prices. The median existing home price rose 14.8% year-over-year to $311,800, the highest annual median price increase in 15 years.

Read the full article here.

Expectations for Housing Availability Improve5

National Association of Homebuilders  10/27/2020

More than one in four prospective buyers expect their search for a home to become easier in the coming months, according to the latest Housing Trends Report. By contrast, 21% of buyers were optimistic on expected availability improvements this time last year.

Across generations, expectations rose most significantly with Gen X and Millennial buyers. Geographically, expectations were most positive in the West and Northeast regions.

Read the full article here.

Public Markets6

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*Calculated as (EBITDA – Capex) / EBITDA

Public Comparables6

Building Products

As of October 31, 2020

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Building Products Distributors

As of October 31, 2020

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Construction Materials

As of October 31, 2020

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Relevant Transactions7

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Representative Building Products & Materials Transactions

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1. The American Surveyor

2. Associated Builders and Contractors

3. CNBC

4. The Wall Street Journal

5. National Association of Homebuilders

6. Capital IQ

7. Mergermarket