building products & materials...prosales 4/20/2017 one of the biggest issues for construction...

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BUILDING PRODUCTS & MATERIALSINDUSTRY UPDATE │ APRIL 2017

PAGE |

BUILDING PRODUCTS & MATERIALS GROUP OVERVIEW

1

CONTENTS

WHAT WE’RE READING

ECONOMIC UPDATE

PUBLIC MARKETS

PUBLIC COMPARABLES

M&A ACTIVITY

CONTACTS

Mike HoganManaging Director

[email protected]

+1 (804) 915-0104

Ryan NelsonManaging Director

[email protected]

+1 (804) 915-0121

Tim WebbManaging Director

[email protected]

+1 (804) 915-0128

Trey PackardVice President

[email protected]

+1 (804) 887-6017

BUILDING PRODUCTS & MATERIALS

INDUSTRY UPDATE │ APRIL 2017

www.harriswilliams.com

INTRODUCTION

Harris Williams & Co. is pleased to present our Building Products and MaterialsIndustry Update for April 2017. This report provides commentary and analysis oncurrent capital market trends and merger and acquisition dynamics within theglobal building products and materials industry.

We hope you find this edition helpful and encourage you to contact us directly ifyou would like to discuss our perspective on current industry trends and M&Aopportunities or our relevant industry experience.

OUR PRACTICE

Harris Williams & Co. is a leading advisor to the building products and materialsindustry. Our significant experience covers a broad range of end markets,industries, and business models.

Aggregates

Aluminum

Asphalt

Bricks

Clay

Glass

Precast / Ready-Mix

Concrete

Steel

Stone

Acoustical

Cabinets and

Countertops

Carpet and Flooring

Gypsum / Wallboard

Electrical Fixtures

HVAC

Lumber

Plumbing Fixtures

Roofing

Siding

Tools and Hardware

Windows and Doors

Architectural and

Engineering

Installation and

Contracting

Lumber and

Hardware

Plumbing

Roofing and Siding

Site Development

Wallboard

Construction

MaterialsBuilding Products

Distribution &

Services

Construction

Materials

Building

Products

Distribution &

Services has been acquired by

a portfolio company of

Select Atlanta,

Georgia

aggregates

assets of LaFarge

SA have been

acquired byhas been acquired by

a division of

has been acquired by





a subsidiary of









&







mailto:[email protected]




http://www.harriswilliams.com/

PAGE |

WHAT WE’RE READING

2

MODULAR CONSTRUCTION HELPS TO EASE LABOR SHORTAGE

BUILDER OPTIMISM DIPS IN APRIL AS POST-ELECTION OUTLOOK MODERATES

CONSTRUCTION MATERIAL COSTS IN MARCH OUTPACE CONTRACTORS' PRICING

CONSTRUCTION JOB OPENINGS POST SMALL INCREASE

AGC of America 4/13/2017

Double-digit price increases for key construction materials pushed up construction costs in March, while the pricescharged by contractors remained moderate, according to a new analysis of federal producer price data releasedtoday by the Associated General Contractors of America. Association officials urged policy makers to avoid adoptingrestrictions on international trade that would add to materials costs and potentially drive up the price of infrastructure,buildings and new homes and apartments. “Prices have jumped in recent months for diesel fuel, steel, copper,wallboard and lumber—materials essential for houses, nonresidential buildings and infrastructure projects,” said KenSimonson, the association’s chief economist.

Read the full article here.



WHY YOUNG AMERICANS AREN’T GOING INTO CONSTRUCTION

Professional Builder 4/18/2017

Labor costs and worker shortages are causing headaches, but builders are finding a new quick and cost-effectiveway to construct their homes or hotels. Bloomberg reports that modular building is on the rise. Prefabricated units,called modules, are built in factories, and then shipped to the job site. These units can be stacked to form anythingfrom a single-family house to a multifamily complex. The factories use advanced robots that work faster and moreprecisely than humans. Companies such as Marriott and Champion Homes have already launched major modularconstruction projects.


NAHB 4/11/2017

The count of unfilled jobs in the construction sector increased slightly in February, after two months of lower levels ofopen positions. According to the BLS Job Openings and Labor Turnover Survey (JOLTS) and NAHB analysis, the numberof open construction sector jobs (on a seasonally adjusted basis) rose to 169,000 in February. The cycle high is 238,000,set in July of last year. The open position rate (job openings as a percent of total employment) for February increasedto 2.4%. On a smoothed twelve-month moving average basis, the open position rate for the construction sector heldsteady at 2.7%, near the cycle high.


ProSales 4/20/2017

One of the biggest issues for construction companies right now is labor. Fewer and fewer young people are enteringthe construction trades, and it’s critical business leaders find out why. Rose Quint, National Association of HomeBuilders assistant VP for survey research, analyzed results of a national poll of 18 – 25 year-olds to determine thebiggest factors keeping millennials from construction. The 63% of undecided young adults who indicated there was noor little chance they would consider a career in the trades no matter the pay were prodded about the reasons fortheir resoluteness. The two most common reasons are wanting a less physically demanding job (48%) and the beliefthat construction work is difficult (32%).


Construction Dive 4/17/2017

Builder confidence in the market for new single-family construction fell three points in April to a reading of 68 on theNational Association of Home Builders/Wells Fargo Housing Market Index, after reaching the highest level recordedsince June 2005 in March. NAHB Chairman Granger MacDonald said in a statement that, even with the decline,builders are reporting strong interest from potential homebuyers. The overall index and sub-indices held above thebreakeven mark of 50. All three HMI measures dropped off in April, with current sales conditions decreasing threepoints to 74, sales expectations for the next six months declining three points to 75, and buyer traffic dipping one pointto 52.


https://www.agc.org/news/2017/04/13/construction-material-costs-march-outpace-contractors-pricing-industry-association

https://www.probuilder.com/modular-construction-helps-ease-labor-shortage

http://eyeonhousing.org/2017/04/construction-job-openings-post-small-increase/

http://www.prosalesmagazine.com/news/why-young-americans-arent-going-into-construction_s?utm_source=newsletter&utm_content=Brief&utm_medium=email&utm_campaign=PS_042417_A (1) A&he=

http://www.constructiondive.com/news/builder-optimism-dips-in-april-as-post-election-outlook-moderates/440548/

PAGE |

ECONOMIC UPDATE

3

INDUSTRIAL PRODUCTION INDEX


GROSS DOMESTIC PRODUCT

Real GDP increased by an annualized rateof 0.5% in the fourth quarter of 2016, andhas increased 2.0% YoY

Current dollar GDP increased 1.0%, or $194billion in the fourth quarter to a level of$18.9 trillion

The Gross Domestic Income (GDI), whichmeasures the value of the production ofgoods and services in the U.S. as the costsincurred and the incomes earned inproduction, increased 0.25% in the fourthquarter of 2016

Industrial production increased 0.5% inMarch after increasing 0.1% in February; it isup 1.5% YoY since March 2016

Capacity utilization for the industrial sectorfell 0.1% in February to 75.4% and is down0.2% since February 2016

Seasonally-Adjusted

Seasonally-Adjusted

(QoQ percentage change)

(Indexed to 2012)


Source: Federal Reserve

Source: Bureau of Economic Analysis

(2.5%)

(2.0%)

(1.5%)

(1.0%)

(0.5%)

0.0%

0.5%

1.0%

1.5%

Q4

2007

Q4

2008

Q4

2009

Q4

2010

Q4

2011

Q4

2012

Q4

2013

Q4

2014

Q4

2015

Q4

2016

94

96

98

100

102

104

106

108

110

PAGE |

ECONOMIC UPDATE

4

PERSONAL CONSUMPTION EXPENDITURES

ECONOMIC SENTIMENT

In February, personal income increased$37.1 billion, or 4.8%, while personalconsumption expenditures (PCE)increased $7 billion, or 0.1%

Wages and salaries increased 0.5% in Q4,after increasing 0.5% in Q3

Purchases of durable goods increased1.8% in February compared to anincrease of 2.4% in January; whilepurchases of non-durable goodsincreased 0.6%, compared to adecrease of 1.0% in January

The Leading Economic Index (LEI)measures how consumers view prospectsfor their own financial situation, how theyview the near-term general economyprospects, and their long-term view ofeconomic prospects

The LEI for the U.S. increased 0.6% inFebruary to 126.2, following a 0.6% increasein January

The LEI is up 3.1% YoY since February 2016

The steady rise in LEI suggests consumers’perception of the economic environmentcontinues to improve

U.S. LEI is the highest it has been sinceMarch 2006



(Percentage change presented on a 3-month rolling average basis)

(Indexed to 2010)

Source: Conference Board Leading Economic Index (LEI)


(0.1%)

0.0%

0.1%

0.2%

0.3%

0.4%

0.5%

0.6%

0.7%

Feb-11 Feb-12 Feb-13 Feb-14 Feb-15 Feb-16 Feb-17

100

105

110

115

120

125

130

PAGE | 5

ECONOMIC UPDATE

CONSUMER CONFIDENCE INDEX (CCI)

KEY INTEREST RATES

The Consumer Confidence Indexincreased to 125.6 in March, up from116.1 in February

Consumer confidence is currently up24.6% over the last six months, and up30.7% since March 2017

Consumers’ appraisal of currentconditions was positive in December.Those saying business conditions are“good” increased from 28.3% to 32.2%;those saying business conditions are“bad” decreased from 13.4% to 12.9%

The proportion of consumers claimingjobs are “plentiful” increased from 26.9%to 31.7%, while those claiming jobs are“hard to get” decreased from 19.9% to19.5%

The Fed has begun its policy of interestrate hikes, with two increases of 13 basispoints since December 2016

The Fed Funds rate in March was 0.79%,up 43 basis points since March 2016



Seasonally-Adjusted

(Indexed to 1985)


Source: Conference Board

0%

1%

2%

3%

4%

5%

6%

7%

8%

30-Year Mortgage Rate

10-Year Treasury Rate

Effective Federal Funds Rate

0

20

40

60

80

100

120

140

PAGE |

0

500

1,000

1,500

2,000

2,500

3,000

1967 1972 1977 1982 1987 1992 1997 2002 2007 2012 2017

6

ECONOMIC UPDATE

U.S. NON-RESIDENTIAL CONSTRUCTION

U.S. HOUSING STARTS



Non-residential construction growthmoderated slightly, having increased1.0% since February 2015

Non-residential construction was flat fromJanuary to February, and has decreased0.3% over the last six months; however,the rolling 12-month average hasincreased steadily since July 2013

Seasonally-Adjusted Annual Rate

($ in billions)

U.S. housing starts in Q1 2017 increased0.4% over Q4 2016, and has increased9.2% YoY

The increase was driven by a 0.2%increase QoQ increase in single-familyhomes and a 0.7% increase in multi-familyhomes

Housing starts continue to rebound fromunprecedented lows reached in 2009,yet remain ~16% below the 50-yearaverage of 1.4 million starts per year

(Units in 000’s)

March 2017 Annualized Starts: 1,215

QoQ Δ: 0.4%

YoY Δ: 9.2%

Source: U.S. Census Bureau

Source: U.S. Census Bureau

50-year average

of 1,443 starts

$450

$500

$550

$600

$650

$700

$750

Non-Residential Construction 12 Mo. Rolling Avg.

PAGE | 7

ECONOMIC UPDATE

RESIDENTIAL HOUSING SPENDING

NAHB REMODELING MARKET INDEX (RMI)

Total residential building spending for2016 was $472 billion, up 7.2% from $440billion in 2015

Residential building spending increasedat a 19.6% CAGR from 2012 to 2016

FMI projects that spending will increaseat a 4.7% CAGR from 2016 through 2020P

The Q4 RMI was 54 and has not dippedbelow 50 since Q3 2009

The overall RMI averages the indicatorsof current and future remodeling activity.An RMI over 50 indicates that remodelersare reporting higher activity than theprevious quarter

On a seasonally-adjusted basis, RMIposted a decrease of 6.6% year-over-year in the fourth quarter



2016 – 2020P CAGR: 4.7%

$253$276

$329

$375

$440$472

$497 $512 $523$541

$0

$100

$200

$300

$400

$500

$600

2011 2012 2013 2014 2015 2016 2017P 2018P 2019P 2020P

Single-family Multifamily Improvements*

*Improvements includes additions, alterations, and major replacements. It

does not include maintenance and repairs.

($ in billions)

Source: FMI Consulting

2012 – 2016 CAGR: 19.6%

Source: NAHB

Seasonally-Adjusted Annual Rate

30

35

40

45

50

55

60

65

70

Q4 2008 Q4 2010 Q4 2012 Q4 2014 Q4 2016

PAGE |

0

10

20

30

40

50

60

70

80

8

M&A MARKET TRENDS

MARKET OBSERVATIONS

BUILDING PRODUCTS QUARTERLY M&A ACTIVITY

After a record year for global M&A volume in 2015, 16.2% higher than 2007’s previous peak, 2016 experiencedsome moderation, with global M&A volume essentially flat year over year

Despite flat M&A volume, valuations have remained high, with investors showing a willingness to pay up for qualityassets

Credit markets also remain strong, with average total debt multiples for middle market leverage buyouts above 5x

Private equity firms in the U.S. have more than $500 billion of dry powder, with the majority held in 2012-2015vintage funds

North American building products deal activity was down 6% in Q1 after being down 12% in Q4 compared to Q32016



Note: Includes all building products or construction materials M&A transactions announced in the U.S. or Canada

Total Transactions: 263

YoY Change: (2.6%)


YoY Change: 1.5%


YoY Change: (18.7%)


YoY Change: 11.5%


YoY Change: (3.3%)

Q1

2011

Q1

2012

Q1

2013

Q1

2014

Q1

2015

Q1

2016

Source: Mergermarket

Q1

2017


YoY Change: (22.2%)

Source: Mergermarket

PAGE | 9

SELECT SECTOR OVERVIEWS & TRENDS

LUMBER AND WOOD PRODUCTS

ROOFING

WINDOWS AND DOORS

Description

Lumber, boards, beams, bolts oriented strand board, poles, shingles,

siding, and wood chips

Industry Commentary:

70% of U.S. lumber demand is driven by housing, including new

construction and remodeling

Prices strengthened throughout 2016 after their depressed levels in 2015,

but still remain lower than 2014 levels

Stable price growth points to continued recovery in the broader

construction market

Framing Lumber Composite Price Index

($ per thousand board feet)

Description

Roofing market includes bituminous, wood, and tile roofing used in residential

applications and metal elastomeric and plastic roofing used in non-

residential applications


U.S. demand for roofing is projected to rise 3.9% annually to 252 million

squares in 2019, representing a total market value of $21.4 billion dollars

Demand for roofing is closely linked to building construction expenditures, but

is typically more sheltered than other building products markets from housing

slumps due to the non-discretionary need for roof repair and replacement

Houses need to be re-roofed every fifteen years on average and the aging

U.S. housing stock is projected to drive continued demand for replacement

Additionally, renewed strength in new housing construction and a generally

stronger economic climate will support growth

Roofing Demand by Primary Segment

Description

Windows and doors market includes metal, wood, and vinyl windows

and doors for residential and non-residential end markets


Window and door demand is driven by new commercial and residential

construction, as well as repair and remodel spending

Quarterly remodeling spend increased 0.8% during Q1 2017, following a

1.6% increase in Q4 2016. Spend for Q1 was ~$300 billion

Continued strength in home prices has increased homeowners’ equity

and demand for remodeling work, providing a strong tailwind for the

window and door industry

Leading Indicator of Remodeling Activity

($ in billions)



Residential

Reroofing

44%

Non-Residential

Reroofing

37%

New Residential

11%

New Non-

Residential

8%

Source: Random Lengths

Source: Freedonia

Source: Joint Center for Housing Studies of

Harvard University

$100

$200

$300

$400

$500

$100

$150

$200

$250

$300

$350

Q1 '13 Q1 '14 Q1 '15 Q1 '16 Q1 '17

PAGE |

$0

$10

$20

$30

$40

$50

$60

2008 2010 2012 2014 2016 2018P


10

WALLBOARD AND PLASTER

HVAC

PLUMBING FIXTURES AND FITTINGS

Description

Primarily made from gypsum, products include wallboard, plaster,

plasterboard, molding, ornamental moldings, statuary, and

architectural plasterwork


Gypsum product demand is primarily driven by new commercial and

residential construction, as well as repair and remodel spending

Over the past two years, rising wallboard prices and cost-saving

measures have improved industry profit margins

New home inventories remain low and as demand for new homes has

grown, builders have begun increasing their stock

U.S. Wallboard Demand Outlook

($ in millions)

U.S. HVAC Demand Outlook

($ in billions)

U.S. Plumping Equipment Industry

Revenue Outlook

($ in billions)



Description

Residential, commercial, and industrial heating, ventilation, air

conditioning, and refrigeration equipment


HVAC demand is primarily driven by residential and non-residential

construction, HVAC replacement, and weather patterns

Aging domestic buildings (75% of buildings were built before the 1980s)

are fueling the demand for replacement equipment

New minimum energy efficiency standards for air conditioning and

corresponding tax credits are driving replacement demand

Description

Plumbing fixtures, bathtub and shower fixtures, and indoor pipes


Through 2018, U.S. demand for plumbing fixtures and fittings is

projected to advance ~3% annually to nearly $55 billion

Primary demand determinants are repair and remodel spending, new

home construction, and non-residential improvement and repair

Industry regulatory bodies continue to focus on water efficiency, with

states leading the way on new codes

$0

$10

$20

$30

$40

$50

$60

$70

2008 2010 2012 2014 2016 2018P

Source: IBIS World

Source: IBIS World

Source: IBIS World

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

2008 2010 2012 2014 2016 2018P

PAGE |

1,200 1,200 1,200 1,200 1,240 1,310 1,400 1,540

838 807 812 815 851901

9411,010

0

500

1,000

1,500

2,000

2,500

3,000

2009 2010 2011 2012 2013 2014 2015 2016Crushed Stone Sand/Gravel


11

AGGREGATES

ASPHALT

CEMENT AND CONCRETE



Description

Broad category of materials such as crushed rock, manufactured sand,

natural sand, and gravel

Most-used material in the world after water


Markets are local in nature due to high shipping costs

Major players include Lafarge, CEMEX, CRH, Heidelberg Cement, Martin

Marietta, Vulcan Materials, Summit Materials, and a large number of

independent operators

U.S. Aggregates Consumption

(values in millions of metric tons)

Description

Paving includes asphalt and tar-paving mixtures

Roofing includes roofing materials and blocks, shingles, roofing cements,

and coatings


Asphalt is used over 85% of the time in U.S. highway and road construction

Resurgent U.S. housing and construction activity and recent government

infrastructure programs have supported asphalt shingle and roofing

cement demand

According to the National Asphalt Paving Association (NAPA), nearly a

third of all asphalt is produced with warm-mix asphalt technologies, up

from less than 5% in 2009

Trailing 12-month Average U.S.

Refinery Net Production of

Asphalt and Road Oil

(thousands of barrels)

Description

Portland, natural, masonry, pozzolanic, and other hydraulic cements

Typically, manufacturers also thermally treat and mine or quarry lime


U.S. cement consumption historically has exceeded domestic production

capacity

Concrete has been gaining share over asphalt since 2008

U.S. cement capacity and import terminals are largely owned or

controlled by international producers

The recent passage of the FAST act provides some certainty for the

cement and concrete industry, but industry leaders are still calling for

increased funding to support a refurbishing of U.S. water infrastructure and

a modernized airport system

U.S. Cement Demand Outlook

($ in millions)

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

2008 2010 2012 2014 2016 2018P

Source: U.S. Geological Survey

Source: U.S. Energy Information Administration

Source: IBIS World

0

4,000

8,000

12,000

16,000

20,000

PAGE |

PUBLIC MARKETS



12

MEDIAN TEV / 2016 EBITDA

MEDIAN REVENUE GROWTH (2016 – 2017P)

MEDIAN EBITDA MARGIN (2012 – 2016) MEDIAN EBITDA MARGIN (2016 – 2017P)

MEDIAN CAPEX / 2016 REVENUE

MEDIAN REVENUE GROWTH CAGR (2012 – 2016)

HISTORICAL STOCK PRICES (APRIL 21ST, 2012 – APRIL 21ST, 2017)

HISTORICAL MEDIAN TEV / NTM EBITDA (APRIL 21ST, 2012 – APRIL 21ST, 2017)

100

140

180

220

260 Building Products Index

Building Products Distributors Index

Construction Materials Index

S&P 500 Index

6.0x

7.0x

8.0x

9.0x

10.0x

11.0x

12.0x

13.0x

Building Products Index

Building Products Distributors Index

Construction Materials Index

S&P 500 Index

8.8%

8.1%

5.0%

Construction Materials

Building Products Distributors

Building Products

10.3%

8.8%

5.7%



Building Products

21.1%

7.6%

14.9%



Building Products

16.6%

5.6%

12.1%



Building Products

9.4x

10.9x

10.4x



Building Products

6.9%

0.7%

3.5%



Building Products

Source: FactSet

PAGE |

PUBLIC COMPARABLES

13

BUILDING PRODUCTS



As of April 21, 2017

Building Products & Services

Stock Performance

Current % of 2016 TEV / EBITDA EBITDA

($ in millions except per share data) Price LTM High Mkt. Cap TEV Rev. EBITDA Margin 2016 2017E

Broader Building Products Manufacturers

Compagnie de Saint-Gobain SA $53.36 98.7% $27,323 $36,078 $41,317 $4,218 10.2% 8.6x 7.8x

LIXIL Group Corp. 25.57 94.7% 7,279 14,036 16,503 1,330 8.1% 10.6x 9.5x

James Hardie Industries PLC 16.43 94.9% 7,134 7,662 1,893 447 23.6% 17.1x 14.2x

Owens Corning 62.14 99.0% 6,933 9,195 5,677 1,089 19.2% 8.4x 8.1x

USG Corporation 31.63 91.2% 4,587 5,265 3,017 629 20.9% 8.4x 8.0x

Armstrong World Industries, Inc. 47.00 97.9% 2,517 3,347 1,235 315 25.5% 10.6x 9.5x

Continental Building Products, Inc. 24.10 90.9% 944 1,195 461 134 29.0% 8.9x 9.0x

Median 94.9% $3,017 $629 20.9% 8.9x 9.0x

Windows & Doors

ASSA ABLOY AB $21.74 96.5% $23,197 $26,345 $8,182 $1,413 17.3% 18.6x 16.8x

JELD-WEN Holding, Inc. 33.02 98.8% 3,429 4,886 3,667 394 10.7% 12.4x 10.9x

Masonite International Corp. 80.45 98.2% 2,390 2,902 1,974 253 12.8% 11.5x 9.8x

Ply Gem Holdings, Inc. 19.35 96.8% 1,300 2,111 1,912 229 12.0% 9.2x 8.2x

Quanex Building Products Corporation 20.15 92.0% 680 945 928 110 11.9% 8.6x 8.8x

Tyman Plc 4.19 97.0% 744 945 557 98 17.6% 9.6x 7.9x

PGT, Inc. 10.70 85.7% 518 750 459 76 16.5% 9.9x 8.9x

Median 96.8% $1,912 $229 12.8% 9.9x 8.9x

HVAC

Daikin Industries, Ltd. $97.85 94.7% $28,672 $31,128 $18,706 $2,797 15.0% 11.1x 10.3x

Lennox International Inc. 165.47 95.7% 7,316 8,099 3,642 521 14.3% 15.6x 13.7x

Median 95.2% $11,174 $1,659 14.6% 13.3x 12.0x

Kitchen & Bath

Masco Corporation $34.78 93.0% $10,987 $13,477 $7,357 $1,211 16.5% 11.1x 10.4x

Fortune Brands Home & Security, Inc. 63.22 98.1% 9,643 11,157 4,985 776 15.6% 14.4x 12.7x

American Woodmark Corporation 89.10 96.6% 1,419 1,266 1,036 124 11.9% 10.2x 9.1x

Caesarstone Ltd. 38.50 88.5% 1,294 1,265 539 130 24.2% 9.7x 10.3x

Median 94.8% $3,010 $453 16.0% 10.7x 10.3x

Building Envelope

Kingspan Group Plc $33.59 99.5% $5,637 $6,568 $3,304 $429 13.0% 15.3x 14.1x

Apogee Enterprises, Inc. 53.60 87.9% 1,495 1,614 1,115 159 14.3% 10.1x 8.2x

NCI Building Systems, Inc. 16.90 93.4% 1,191 1,566 1,685 166 9.9% 9.4x 8.3x

Median 93.4% $1,685 $166 13.0% 10.1x 8.3x

Install / Service

TopBuild Corp. $50.13 99.3% $1,874 $1,943 $1,743 $140 8.0% 13.9x 11.4x

Installed Building Products, Inc. 54.50 99.8% 1,698 1,862 863 105 12.2% 17.7x 12.6x

Comfort Systems USA, Inc. 35.50 89.5% 1,309 1,313 1,634 128 7.8% 10.3x 9.4x

Median 99.3% $1,634 $128 8.0% 13.9x 11.4x

Lighting

Acuity Brands, Inc. $179.73 64.0% $7,833 $7,801 $3,291 $572 17.4% 13.6x 12.8x

Hubbell Incorporated 121.24 96.3% 6,598 7,308 3,505 569 16.2% 12.9x 12.0x

Median 80.1% $3,398 $570 16.8% 13.3x 12.4x

Flooring

Mohawk Industries, Inc. $236.91 99.5% $17,456 $20,086 $8,959 $1,705 19.0% 11.8x 10.9x

Tarkett SA 44.04 97.2% 2,597 3,207 2,921 350 12.0% 9.2x 8.4x

Interface, Inc. 19.18 96.2% 1,207 1,354 959 135 14.1% 10.0x 9.1x

Armstrong Flooring, Inc. 18.82 82.0% 519 517 1,193 83 7.0% 6.2x 6.5x

Median 96.7% $2,057 $243 13.0% 9.6x 8.7x

Pipe, Valves, & Fittings

Geberit AG $441.23 98.5% $15,763 $16,740 $2,787 $787 28.2% NM NM

Georg Fischer AG 916.75 97.1% 3,658 4,004 3,739 441 11.8% 9.1x 8.7x

Mueller Industries, Inc. 34.36 78.2% 1,944 1,878 2,056 195 9.5% 9.6x NA

NORMA Group SE 52.70 92.6% 1,584 2,090 955 191 20.0% 11.0x 10.1x

Uponor Oyj Class A 18.62 97.1% 1,318 1,597 1,166 132 11.3% 12.1x 9.6x

Advanced Drainage Systems, Inc. 23.00 80.7% 1,247 1,966 1,243 198 16.0% 9.9x 9.4x

Reliance Worldwide Corp. Ltd. 2.30 86.1% 1,181 1,287 387 71 18.5% 18.0x 14.4x

Polypipe Group PLC 5.23 99.6% 1,030 1,248 546 107 19.6% 11.6x 10.6x

Median 94.8% $1,205 $193 17.2% 11.0x 9.9x

Overall Median 96.2% $1,893 $229 14.3% 10.4x 9.5x

Source: FactSet

PAGE |

PUBLIC COMPARABLES

14

BUILDING PRODUCTS DISTRIBUTORS



1) Pro forma EBITDA figures from the presentation for the Rugby Architectural Building Products acquisition



Stock Performance



Wolseley plc $6.31 97.5% $15,555 $17,553 $18,737 $1,525 8.1% 11.5x 11.2x

HD Supply Holdings, Inc. 40.25 90.0% 8,053 11,868 7,439 921 12.4% 12.9x 11.9x

Beacon Roofing Supply, Inc. 50.46 98.7% 3,034 4,107 4,127 347 8.4% 11.8x 10.8x

Builders FirstSource, Inc. 15.75 97.9% 1,729 3,577 6,367 381 6.0% 9.4x 7.9x

BMC Stock Holdings, Inc. 23.30 97.5% 1,548 1,920 3,094 192 6.2% 10.0x 8.3x

GMS Inc. 35.29 98.2% 1,434 2,091 2,310 185 8.0% 11.3x 9.6x

Richelieu Hardware Ltd 22.71 99.9% 1,308 1,315 634 71 11.2% 18.6x 16.5x

SIG plc 1.54 72.0% 891 1,234 3,462 144 4.2% 8.6x 8.3x

Foundation Building Materials, Inc. 16.29 91.0% 338 838 1,761 80 4.5% 10.5x NA

CanWel Building Materials Group Ltd. 4.45 80.7% 300 377 727 38 5.2% 10.0x 8.4x

Hardwoods Distribution Inc. 12.64 82.2% 265 314 591 34 5.8% 9.2x 7.7x

Huttig Building Products, Inc. 8.87 96.0% 232 273 710 21 3.0% 13.0x 10.1x


Source: FactSet

PAGE |

PUBLIC COMPARABLES

15

CONSTRUCTION MATERIALS





Stock Performance



Aggregates and Cement

LafargeHolcim Ltd. $57.88 96.2% $35,148 $53,391 $26,615 $5,636 21.2% 9.5x 9.0x

CRH Plc 36.25 98.4% 29,034 36,546 28,588 3,308 11.6% 11.0x 9.8x

HeidelbergCement AG 95.14 92.5% 17,907 29,733 17,074 3,185 18.7% 9.3x 8.0x

Vulcan Materials Company 121.69 88.1% 16,045 18,239 3,593 966 26.9% 18.9x 15.3x

Martin Marietta Materials, Inc. 220.93 90.6% 13,709 15,747 3,577 972 27.2% 16.2x 14.2x

Eagle Materials Inc. 96.06 86.8% 4,610 4,936 1,199 414 34.5% 11.9x 9.8x

Summit Materials, Inc. 25.95 98.1% 2,711 3,206 1,488 371 25.0% 8.6x 7.6x

U.S. Concrete, Inc. 63.55 89.1% 1,001 1,405 1,168 160 13.7% 8.8x 7.1x

Median 91.5% $3,585 $969 23.1% 10.3x 9.4x

Heavy Construction Materials

Boral Limited $4.53 86.3% $5,221 $3,074 $3,122 $462 14.8% 6.7x 6.3x

Forterra, Inc. 18.59 81.7% 1,177 1,972 1,364 265 19.5% 7.4x 7.1x

Median 84.0% $2,243 $364 17.1% 7.0x 6.7x


Source: FactSet

PAGE |

M&A TRANSACTIONS

16



Announced

DateTarget Vertical Business Description Acquirer

4/18/2017 River City Building Supply Building Products

Distribution

Distributor of fasteners, fastening equipment and other critical

construction supplies.

SouthernCarlson

4/18/2017 Diversitech Building Products

Distribution

Supplier of a wide variety of products and categories including

equipment pads, condensate pumps, motors, and chemicals.

Permira Advisers

4/18/2017 Cemex (Pacific Northwest

Materials Business)

Construction Materials Consists of aggregate, asphalt and ready mix concrete operations in

Oregon and Washington.

Cadman Materials (a

subsidiary of

HeidelbergCement Group)

4/12/2017 Pental Surfaces Building Products

Distribution

Distributor of natural and engineered stone and tile. Architectural Granite &

Marble

4/11/2017 Corbett Aggregates Construction Materials Prov ider of concrete sand with approximately 401 acres of land with

over 35 million tons of proven reserves.

U.S. Concrete, Inc.

4/10/2017 Oberfields Construction Materials Manufacturer and distributor of concrete masonry and hardscape

products.

Graycliff Partners

4/6/2017 General LED Building Products &

Serv ices

Manufacturer of LED lighting products. The CapStreet Group

4/4/2017 Specialty Building Products

Div ision of I rwin Builders

Supply Corporation

Building Products &

Serv ices

Prov ider of specialty building products. Foundation Building

Materials, LLC

3/21/2017 Chelsea Building Products Building Products &

Serv ices

Designer and manufacturer of customized engineered extruded profiles

used in PVC windows and doors, cellular PVC molding, composite

cellular PVC cladding, and other specialty building products.

Aluplast

3/20/2017 Advanced Environmental

Recycling Technologies

(AERT)

Building Products &

Serv ices

Manufacturer of composite building materials. Oldecastle Architectural

3/14/2017 Binswanger Glass Building Products &

Serv ices

Full-serv ice designer, retailer, and installer of architectural glass and

aluminum products within the construction, residential, and automotive

markets.

Wingate Partners

3/13/2017 U.S. Marble Building Products

Distribution

Nationwide supplier of custom bathroom surfaces. Clio Holdings

3/9/2017 Tealstone Construction Construction Materials Market leader in commercial and residential concrete construction in

the Dallas-Fort Worth area.

Sterling Construction

Company

3/6/2017 MKM Building Supplies Building Products

Distribution

Distributor of building, timber and plumbing supplies, and stock a wide

range of products.

Bain Capital

2/28/2017 Greco Aluminum Railings Building Products &

Serv ices

Manufacturer of building railing and safety systems. CSW Industrials

2/27/2017 Surface Preparation

Technologies

Building Products &

Serv ices

Prov ider of rumble strips and related roadway safety serv ices. Branford Castle Partners

2/23/2017 BCH Holdings Building Products &

Serv ices

Mechanical contractor. Comfort Systems

2/22/2017 Atlas Lighting Products Building Products &

Serv ices

Manufacturer of high-quality LED lighting products sold into the

electrical distribution market.

LSI Industries

2/22/2017 PV Sullivan Supply Building Products

Distribution

Plumbing and heating supplier serv ing Boston and Eastern

Massachusetts.

Ferguson

2/17/2017 Mariak Industries &

Patrician Window

Coverings

Building Products

Distribution

Provider of residential and commercial window coverings as well as an

array of products and serv ices for interior design customers.

Springs Window Fashions,

LLC

Source: MergerMarket

PAGE |

M&A TRANSACTIONS

17



Announced


2/15/2016 Interior Logic Building Products &

Serv ices

Prov ider of turn-key design center serv ices and interior finish solutions to

residential homebuilders.

Platinum Equity, LLC

2/15/2017 Gaco Western Building Products &

Serv ices

Manufacturer of coatings for waterproofing and insulation. Firestone Building Products

Company, LLC

2/14/2017 Midwest Wholesale

Hardware

Building Products

Distribution

Leading value-added wholesale distributor of commercial and

institutional door hardware, electronic access control and security

products.

High Road Capital Partners

2/9/2017 Bentley Mills Building Products &

Serv ices

Global manufacturer of modular carpet tile, broadloom, and area rugs. Lone Star Funds

2/8/2017 Stone Forest Materials Building Products

Distribution

Distributor of hardscape and related products to landscape

professionals.

SiteOne Landscape Supply

2/7/2017 Futura Industries Building Products &

Serv ices

Designs and manufactures a wide range of extruded aluminum

products including branded flooring trims and TSLOTS.

The William L Bonnell

Company

2/6/2017 Evergreen Lumber Building Products

Distribution

Lumber distributor serv ing Washington state. Homewood Holdings

2/2/2017 Baker Brothers Building Products &

Serv ices

Market-leading provider of residential plumbing and HVAC repair and

installation serv ices.

Wrench Group

2/1/2017 Ridout Companies Building Products

Distribution

The largest privately owned building products and materials dealer in

Arkansas.

US LBM Holdings, LLC

2/1/2017 Original Cast Lighting Building Products &

Serv ices

Specializes in architectural lighting solutions for commercial and high-

end residential buildings in the United States.

Legrand

1/31/2017 Arbo Holdings Building Products &

Serv ices

Manufactures a range of sealants, coatings and other building

envelope products to the UK and European construction markets for

waterproofing and air and vapor barrier applications.

Carlisle Cos. Inc

1/31/2017 Set-Rite Building Products &

Serv ices

Manufactures a patented toilet flange spacer system that can be used

for both retrofit applications and new construction.

Oatey

1/27/2017 Arrow Tru-Line Building Products &

Serv ices

Manufacturer and supplier of critical hardware components for the U.S.

sectional overhead door market.

Sun Capital Partners, Inc.

1/25/2017 Air King Fastening Systems Building Products &

Serv ices

Offers a range nailers and industrial staplers, as well as screws and nails

in all crowns and lengths.

SouthernCarlson

1/21/2017 Aspen Valley Landscape

Supply

Building Products

Distribution

Distributor of hardscapes and landscape supplies to the professional

market.

SiteOne Landscape Supply

1/19/2017 US Floors Building Products &

Serv ices

Dalton, Georgia-based hardwood floor manufacturer. The Shaw Group

1/18/2017 Midwest Fireproofing Building Products &

Serv ices

Heavy commercial fireproofing and insulation company with locations

in Chicago and Indianapolis.

TopBuild

1/12/2017 AWP Windows & Doors Building Products &

Serv ices

The merger will create the largest window and door manufacturer in

Florida.

TM Windows

1/10/2017 United Subcontractors Building Products &

Serv ices

Prov ides insulation, specialty, and shell construction serv ices for

residential and commercial projects.

Trilantic North America

1/6/2017 Everist Materials &

Razorback Concrete

Construction Materials Owns ready-mix concrete and asphalt plants in proximity to Summit’s

existing portfolio.

Summit Materials


PAGE |

M&A TRANSACTIONS

18



Announced


1/4/2017 Binford Supply Building Products

Distribution

One of the largest residential & commercial fencing distributors in Texas,

primarily serv ing residential and commercial fencing contractors

throughout TX and OK.

U.S. Fence Solutions

1/4/2017 Tradesmen International Building Products &

Serv ices

Prov ider of outsourced skilled craftsmen to non-residential construction

and industrial contractors.

Blackstone

1/2/2017 Stetson Building Products Construction Materials Distributor of over 70,000 SKUs of construction materials, accessories and

tools, primarily for professional concrete and masonry contractors in the

United States and Canada, v ia 48 branches.

Construction Supply

12/26/2016 Floors, Inc. & Malibu

Acceptance Corporation

Building Products

Distribution

Full serv ice designer, installer and retailer of flooring products to home

builders and homeowners.

Dunes Point Capital

12/21/2016 Soft-Lite Windows Building Products &

Serv ices

Manufacturer of v inyl replacement windows. Harvey Building Products

12/21/2016 ForzaStone Construction Materials Manufacturer of thin natural stone panels for commercial and

residential applications.

Home Brands Group

12/20/2016 East Haven Landscape

Products

Building Products

Distribution

Distributor of nursery, hardscapes and landscape supplies. SiteOne Landscape Supply,

Inc.

12/16/2016 BJ Supply Building Products

Distribution

Distributor of roofing and related building products. Beacon Roofing Supply,

Inc.

12/16/2016 O&S Doors Building Products &

Serv ices

Manufacturer of made-to-measure kitchen doors. Sun Capital Partners, Inc.

12/15/2016 Tectum, Inc. Building Products &

Serv ices

Manufacturer of acoustical ceiling, wall and structural solutions for

commercial building applications.

Armstrong World Industries

12/15/2016 Rmax Operating Building Products &

Serv ices

Market leader in the production of polyiso insulation products for

complete building envelope solutions (roofing and wall systems).

Sika

12/14/2016 Sotawall, Inc. Building Products &

Serv ices

Designer and fabricator of curtainwall systems for commercial

construction projects.

Apogee Enterprises

12/12/2016 Ray L Hellwig Plumbing &

Heating

Building Products &

Serv ices

Designer and installer of plumbing systems. Total Facility Solutions

12/7/2016 SGI, Inc. (door and drywall

div isions)

Building Products &

Serv ices

Interior Products Supply Drywall Div ision and Interior Products Supply

Door Div ision of SGI, Inc.

Clio

12/7/2016 Rosboro Building Products &

Serv ices

Manufacturer of forest products. GMS Inc.

12/6/2016 Top Master Building Products &

Serv ices

Leading regional countertop manufacturer. Wynnchurch Capital, LLC

12/6/2016 ConTech Lighting Building Products &

Serv ices

Manufacturer of high-performance and sustainable lighting solutions

and fixtures.

Lev iton

12/5/2016 Bassi Construction Ltd. Building Products &

Serv ices

Prov ider of construction serv ices. Mosaic Capital

Corporation

12/5/2016 ES Windows Building Products

Distribution

US-based distributor of architectural glass, windows, and aluminum

products.

Tecnoglass S.A.

12/2/2016 Xella Construction Materials World's largest manufacturer of aerated concrete blocks, calcium-

silicate units, and high-performance boards.

Lone Star Funds


PAGE |

REPRESENTATIVE BUILDING PRODUCTS & MATERIALS TRANSACTIONS

20



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has completed a balance sheet

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