Building Products & Materials Group Overview

Introduction

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

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

Builder Confidence Hits Yearly High in September1

NAHB  9/17/2019

"Builder confidence in the market for newly-built single-family homes rose one point to 68 in September from an upwardly revised August reading of 67, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released today. Sentiment levels have held in the mid- to upper 60s since May and September’s reading matches the highest level since last October.

'Low interest rates and solid demand continue to fuel builders’ sentiments even as they continue to grapple with ongoing supply-side challenges that hinder housing affordability, including a shortage of lots and labor,' said NAHB Chairman Greg Ugalde, a home builder and developer from Torrington, Conn."

Read the full article here.

US New Home Sales Increase More Than Expected in August2

CNBC  9/25/2019

"Sales of new U.S. single-family homes rebounded more than expected in August, the latest sign that the struggling housing market was starting to get a lift from lower mortgage rates. The Commerce Department said on Wednesday new home sales increased 7.1% to a seasonally adjusted annual rate of 713,000 units last month, boosted by a surge in activity in the South and West. July’s sales pace was revised up to 666,000 units from the previously reported 635,000 units.

Economists polled by Reuters had forecast new home sales, which account for about 11.5% of housing market sales, increasing 3.5% to a pace of 660,000 units in August."

Read the full article here.

ABC’s Construction Backlog Indicator Inches Lower in July3

Associated Builders & Contractors  9/17/2019

"Associated Builders and Contractors reported today that its Construction Backlog Indicator fell to 8.5 months in July 2019, down 0.3 months or 2.9% from June 2019, when CBI stood at 8.8 months.

'Construction backlog declined in all four major regions in July,' said ABC Chief Economist Anirban Basu. 'While the Northeast and South—the regions with the lengthiest backlog—experienced minor dips, the West and the Middle States exhibited more significant declines. Despite the 9.3% monthly decline in the West region, backlog remains above levels observed in early 2019. For the Middle States, however, backlog is at its lowest level since the last quarter of 2015, largely due to a dip in activity in the commercial / institutional segment, the largest segment represented in ABC’s survey.'"

Read the full article here.

U.S. Housing Starts, Building Permits Scale 12-Year High4

Reuters  9/18/2019

"U.S. homebuilding surged to more than a 12-year high in August as both single- and multi-family housing construction accelerated, suggesting that lower mortgage rates were finally providing a boost to the struggling housing market. The report from the Commerce Department on Wednesday also showed permits for future home construction rose to levels last seen in 2007. Housing and manufacturing have been the weak spots in the economy, which is now in its 11th year of expansion, the longest in history.

The jump in homebuilding activity last month added to strong retail sales data in suggesting the economy continues to grow moderately and is probably not flirting with a recession as has been flagged by financial markets. A year-long trade war between the United States and China has dimmed the economic outlook."

Read the full article here.

Home-Builder Stocks Jump as Mortgage Rates Slide5

Wall Street Journal  9/17/2019

"Shares of home-building companies are on pace for their best year since 2012, buoyed by a drop in mortgage rates and firming housing data. That marks a reversal after worries about a stagnant housing market, labor shortages and slowing global growth pummeled home-builder shares last year.

The gains come as a measure of confidence among home builders rallied this month to the highest level of the year. The National Association of Home Builders’ housing-market index rose to 68 in September, its highest level since October 2018."

Read the full article here.

Public Markets6

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Public Comparables6

Building Products

As of September 30, 2019

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Building Products Distributors

As of September 30, 2019

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Construction Materials

As of September 30, 2019

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Relevant Transactions7

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Representative Building Products & Materials Transactions

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1. NAHB

2. CNBC

3. Associated Builders & Contractors

4. Reuters

5. Wall Street Journal

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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