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BUILDING PRODUCTS & MATERIALSINDUSTRY UPDATE │ JULY 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 │ JULY 2017

www.harriswilliams.com

INTRODUCTION

Harris Williams & Co. is pleased to present our Building Products and MaterialsIndustry Update for July 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






&









a division of

mailto:[email protected]




http://www.harriswilliams.com/

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WHAT WE’RE READING

2

HOME PRICES UP 6.7% FROM JUNE 2016 DRIVEN BY INVENTORY SHORTAGES

THE BRAVE NEW WORLD OF CONSTRUCTION RECRUITING

MISSING THE MILLENNIAL MARK

CHANGES TO IMMIGRATION POLICIES COULD IMPACT CONTRACTORS

Architect Magazine 7/28/2017

It's easy to pin Gen Y's lag in household formation on lack of affordable inventory and student loan debt, but their loftyexpectations of what a first home should be plays a role as well. The challenges of home ownership for oldersegments of Gen Y are rooted in economic circumstance, but are bolstered by the cultural influence of consumerismthey witnessed during their formative years. Although home builders face the onerous task of finding a cost-effectivesolution to capture the demographic, Millennials should be feeling pressure to enter the market as well. The reality ofour current economic climate indicates that there could be more danger for prospective Millennial homebuyers toplay the waiting game while builders devise ways to check most of the items on their wishlist.

Read the full article here.



THE NEXT BIG CHALLENGE FOR SMALL DOWNTOWNS

Builder Online 8/01/2017

Home prices were up strongly in June both year-over-year and month over month, with gains of 6.7% and 1.1%respectively, according to the CoreLogic Home Price Index. “The growth in sales is slowing down, and this is not due tolack of affordability, but rather a lack of inventory,” said Dr. Frank Nothaft, chief economist for CoreLogic. “As of Q22017, the unsold inventory as a share of all households is 1.9%, which is the lowest Q2 reading in over 30 years.” TheCoreLogic HPI Forecast indicates that home prices will increase by 5.2% on a year-over-year basis from June 2017 toJune 2018.


Constructor Magazine 7/10/2017

President Donald Trump promised a crackdown on undocumented people living and working in the U.S., which couldimpact contractors who hire them—unwittingly or not. While a judge has blocked Trump’s executive order to withholdfederal funding from sanctuary cities that don’t cooperate with immigration enforcement, if the injunction is lifted or ifthe administration finds other ways to force those cities to cooperate, the construction industry could feel the effectson its workforce.


CityLab 7/30/2017

America’s smaller cities are winning people back with an explosion of new residential and entertainment options. Nowthey need to get serious about private sector job growth—and tech isn’t the silver bullet. The urban centers of NewYork and Chicago boast record high employment. In San Francisco and Seattle, there’s an explosion of residentialconstruction, dining, and entertainment options, as well as a commercial rebirth in high-end, white-collaremployment. But in many smaller cities, the downtown renaissance doesn’t rest on such solid ground. Analysis byWendell Cox found that just six cities were responsible for about three-fourths of all major-city downtown employmentgrowth from 2010 to 2013.


Construction Dive 7/26/2017

There will soon be a deficit of 200,000 to 250,000 construction workers annually nationwide. Part of that drop-off willcome as the result of older workers retiring, making the need to transfer their knowledge and skills to those taking theirplace an urgent one. The challenge, of course, is finding those new workers. The training programs are there, butinspiring students to go into construction is still one of the biggest battles the industry faces today. Even if efforts torecruit the next generation are successful, construction payrolls will drop 20% in the next four to five years as workersage out of the industry. A lot of knowledge will leave with them. It’s a game of catch-up, and the industry has fallenbehind.


http://www.architectmagazine.com/practice/market-intel/missing-the-millennial-mark_o

http://www.builderonline.com/money/prices/home-prices-up-67-from-june-2016_o

http://www.constructormagazine.com/changes-to-immigration-policies-could-impact-contractors/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+ConstructorMagazine+(Constructor+Magazine)#.WYDY2YWcGUk

https://www.citylab.com/life/2017/07/jobs-in-smaller-cities-private-sector-growth/535329/?utm_source=nl__link3_073117

http://www.constructiondive.com/news/the-brave-new-world-of-construction-recruiting/447848/

PAGE |

ECONOMIC UPDATE

3

INDUSTRIAL PRODUCTION INDEX


GROSS DOMESTIC PRODUCT

Real GDP increased by an annualized rateof 0.3% in the fourth quarter of 2016, andhas increased 2.0% YoY

Current dollar GDP increased 0.8%, or $152billion in the first quarter to a level of $19.0trillion

The Gross Domestic Income, whichmeasures the value of the production ofgoods and services in the U.S. as the costsincurred and the incomes earned inproduction, increased 0.7% in the firstquarter of 2017

Industrial production increased 0.4% in Juneafter increasing 0.1% in May; it is up 2.0%YoY since June 2016

Capacity utilization for the industrial sectorrose 0.2% in June to 74.8% and is up 0.1%since June 2016

Seasonally-Adjusted

Seasonally-Adjusted

(QoQ percentage change)

(Indexed to June 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%

Q12008

Q12009

Q12010

Q12011

Q12012

Q12013

Q12014

Q12015

Q12016

Q12017

94

96

98

100

102

104

106

108

110

PAGE |

ECONOMIC UPDATE

4

PERSONAL CONSUMPTION EXPENDITURES

ECONOMIC SENTIMENT

In June, personal income decreased $18.3 billion, or 3.2%, while personal consumption expenditures increased $8 billion, or 0.1%

Wages and salaries increased 0.5% in Q1, after increasing 0.8% in Q4

Purchases of durable goods increased 6.5% in June compared to a decrease of 0.1% in May; while purchases of non-durable goods increased 0.9%, compared to a increase of 0.3% in May

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% in Juneto 127.8, following a 0.2% increase in May

The LEI is up 4.0% YoY since June 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%

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

100

105

110

115

120

125

130

PAGE | 5

ECONOMIC UPDATE

CONSUMER CONFIDENCE INDEX (CCI)

KEY INTEREST RATES

The Consumer Confidence Indexdecreased to 117.3 in June, down from117.6 in May

Consumer confidence is currently up5.1% over the last six months, and up20.4% since June 2016

Consumers’ appraisal of currentconditions was positive in June. Thosesaying business conditions are “good”increased from 29.8% to 30.8%; thosesaying business conditions are “bad”decreased from 13.9% to 12.7%

The proportion of consumers claimingjobs are “plentiful” increased from 30.0%to 32.8%, while those claiming jobs are“hard to get” decreased from 18.3% to18.0%

The Fed has continues its policy of interestrate hikes, with a 25 basis points increasein June

The Fed Funds rate in June was 1.0%, up66 basis points since June 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 decreased3.1% since June 2016

Non-residential construction was downfrom May to June, and has decreased1.4% over the last six months

Seasonally-Adjusted Annual Rate

($ in billions)

U.S. housing starts in Q2 2017 decreased 6.0% over Q1 2017, and have increased 2.1% YoY

The decrease was driven by a 1.8% QoQdecrease in single-family homes and a 14.8% decrease in multi-family homes

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

(Units in 000’s)

June 2017 Annualized Starts: 1,215

QoQ Δ: (6.0)%

YoY Δ: 2.1%

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 Q2 RMI was 57 and has not dippedbelow 50 since Q3 2009

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

On a seasonally-adjusted basis, RMIposted a increase of 1.3% year-over-yearin the second 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

Q2 2009 Q2 2011 Q2 2013 Q2 2015 Q2 2017

PAGE |

0

10

20

30

40

50

60

70

80

8

M&A MARKET TRENDS

MARKET OBSERVATIONS

BUILDING PRODUCTS QUARTERLY M&A ACTIVITY

Following a strong finish to 2016, in which over 11,600 M&A transactions were consummated in the U.S. andCanada, the first quarter of 2017 proved to be increasingly robust

The first quarter of 2017 featured transaction volume that eclipsed the volume over the same period in 2007, apeak year in which nearly 13,000 transactions were consummated in the U.S. and Canada

Credit markets also remain strong, with the leveraged loan market experiencing a record level of new issuancevolume in Q1 2017

Private equity firms in the U.S. have more than $500 billion of dry powder, with the majority held in 2013-2016vintage funds

While the overall M&A market has experienced growth, YOY, the number of building products transactions hasmoderated steadily over the prior four quarters

North American building products deal volume was down 6% in Q2 after being down 6% in Q1 compared to Q42016



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

Q2

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 2017 after their depressed levels in 2015

and stable performance in 2016

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 1.9% during Q2 2017, following a

0.9% increase in Q1 2017. Spend for Q1 was ~$305 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

Q2 '13 Q2 '14 Q2 '15 Q2 '16 Q2 '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, 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 |

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

11.2x

10.6x

11.3x

Construction Materials

Building Products Distributors

Building Products

6.9%

0.7%

3.5%



Building Products

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 (JULY 29, 2012 – JULY 29, 2017)

HISTORICAL MEDIAN TEV / NTM EBITDA (JULY 29, 2012 – JULY 29, 2017)

100

140

180

220

260 Building Products Index

Building Products Distributors Index

Construction Materials Index

S&P 500 Index

8.8%

8.1%

5.0%



Building Products

9.2%

8.8%

5.2%



Building Products

20.4%

7.6%

15.4%



Building Products

16.6%

5.6%

12.1%



Building Products

Source: FactSet

PAGE |

PUBLIC COMPARABLES

13

BUILDING PRODUCTS



As of July 29, 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 $55.69 97.0% $30,674 $39,074 $41,317 $4,351 10.5% 9.0x 7.7x

Owens Corning 67.22 97.7% 7,455 10,125 5,677 1,105 19.5% 9.2x 8.5x

LIXIL Group Corp. 25.42 94.1% 7,392 13,942 15,841 1,376 8.7% 10.1x 10.0x

James Hardie Industries PLC 15.53 89.1% 6,744 7,317 1,922 436 22.7% 16.8x 14.7x

USG Corporation 27.07 78.1% 3,878 4,623 3,017 551 18.3% 8.4x 7.9x

Armstrong World Industries, Inc. 44.50 92.7% 2,568 3,190 1,235 228 18.5% 14.0x 9.0x

Continental Building Products, Inc. 21.70 81.8% 871 1,070 461 134 29.0% 8.0x 7.8x

Median 92.7% $3,017 $551 18.5% 9.2x 8.5x

Windows & Doors

ASSA ABLOY AB $21.47 94.4% $23,756 $26,456 $8,182 $1,505 18.4% 17.6x 15.2x

JELD-WEN Holding, Inc. 32.21 92.2% 3,428 4,886 3,667 319 8.7% 15.3x 10.8x

Masonite International Corp. 77.65 91.0% 2,318 2,804 1,974 234 11.8% 12.0x 9.8x

Ply Gem Holdings, Inc. 17.50 87.5% 1,197 2,049 1,912 226 11.8% 9.1x 8.0x

Tyman Plc 4.74 98.2% 829 1,089 557 103 18.4% 10.6x 8.9x

Quanex Building Products Corporation 22.50 99.3% 741 1,054 928 103 11.1% 10.3x 10.0x

PGT, Inc. 12.95 97.7% 642 878 459 73 15.8% 12.1x 10.4x

Median 94.4% $1,912 $226 11.8% 12.0x 10.0x

HVAC

Daikin Industries, Ltd. $106.08 97.9% $30,959 $33,606 $17,925 $2,916 16.3% 11.5x 11.2x

Lennox International Inc. 171.02 88.8% 7,213 8,465 3,642 526 14.4% 16.1x 14.3x

Median 93.3% $10,783 $1,721 15.4% 13.8x 12.7x

Kitchen & Bath

Masco Corporation $38.57 98.0% $12,148 $14,453 $7,357 $1,237 16.8% 11.7x 10.9x

Fortune Brands Home & Security, Inc. 65.66 97.3% 10,103 11,538 4,985 778 15.6% 14.8x 13.1x

American Woodmark Corporation 98.30 91.6% 1,600 1,400 1,030 126 12.2% 11.1x 9.9x

Caesarstone Ltd. 35.05 79.7% 1,205 1,119 539 127 23.6% 8.8x 9.1x

Median 94.4% $3,008 $453 16.2% 11.4x 10.4x

Building Envelope

Kingspan Group Plc $33.13 91.4% $5,937 $6,484 $3,304 $453 13.7% 14.3x 12.6x

Apogee Enterprises, Inc. 52.28 85.7% 1,503 1,554 1,115 158 14.2% 9.8x 7.3x

NCI Building Systems, Inc. 17.85 96.0% 1,276 1,601 1,685 156 9.3% 10.3x 8.5x

Median 91.4% $1,685 $158 13.7% 10.3x 8.5x

Install / Service

TopBuild Corp. $52.37 94.7% $1,955 $2,038 $1,743 $135 7.7% 15.1x 11.4x

Installed Building Products, Inc. 52.90 95.4% 1,714 1,930 863 103 12.0% 18.7x 12.9x

Comfort Systems USA, Inc. 33.75 85.1% 1,242 1,343 1,634 127 7.8% 10.6x 9.5x

Median 94.7% $1,634 $127 7.8% 15.1x 11.4x

Lighting

Acuity Brands, Inc. $204.11 72.7% $8,530 $9,005 $3,291 $558 17.0% 16.1x 14.5x

Hubbell Incorporated 119.50 94.9% 6,498 7,309 3,505 605 17.3% 12.1x 12.3x

Median 83.8% $3,398 $582 17.1% 14.1x 13.4x

Flooring

Mohawk Industries, Inc. $248.65 98.8% $18,505 $21,424 $8,959 $1,788 20.0% 12.0x 11.5x

Tarkett SA 41.91 82.6% 2,614 3,148 2,921 355 12.2% 8.9x 8.0x

Interface, Inc. 18.90 89.8% 1,190 1,351 959 135 14.1% 10.0x 9.3x

Armstrong Flooring, Inc. 17.52 76.3% 480 531 1,193 66 5.5% 8.1x 6.6x

Median 86.2% $2,057 $245 13.1% 9.4x 8.7x

Pipe, Valves, & Fittings

Geberit AG $472.49 97.6% $17,744 $17,894 $2,769 $773 27.9% NM NM

Georg Fischer AG 1,121.09 94.7% 4,661 4,978 3,739 411 11.0% 12.1x 9.9x

NORMA Group SE 60.38 94.4% 1,926 2,353 955 196 20.6% 12.0x 9.9x

Mueller Industries, Inc. 30.99 70.5% 1,815 2,127 2,056 195 9.5% 10.9x NA

Reliance Worldwide Corp. Ltd. 2.69 95.1% 1,400 1,496 387 3 0.9% NM 15.8x

Advanced Drainage Systems, Inc. 20.40 74.1% 1,143 1,883 1,257 157 12.5% 12.0x 8.9x

Polypipe Group PLC 5.25 92.3% 1,049 1,253 546 118 21.7% 10.6x 10.4x

Median 94.4% $1,257 $195 12.5% 12.0x 9.9x

Overall Median 92.5% $1,917 $227 14.1% 11.3x 9.9x

Source: FactSet

PAGE |

PUBLIC COMPARABLES

14

BUILDING PRODUCTS DISTRIBUTORS



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

As of July 29, 2017


Stock Performance



Wolseley plc $5.95 89.6% $15,219 $16,574 $18,737 $1,534 8.2% 10.8x 10.4x

HD Supply Holdings, Inc. 32.35 72.3% 6,584 10,228 7,439 901 12.1% 11.4x 14.3x

Beacon Roofing Supply, Inc. 45.69 87.7% 2,769 3,774 4,127 357 8.7% 10.6x 9.9x

Builders FirstSource, Inc. 15.51 94.0% 1,761 3,715 6,367 348 5.5% 10.7x 8.3x

Richelieu Hardware Ltd 26.16 100.0% 1,506 1,528 634 70 11.1% NM 17.6x

BMC Stock Holdings, Inc. 21.95 91.8% 1,472 1,863 3,094 180 5.8% 10.4x 8.4x

SIG plc 2.11 97.7% 1,291 1,574 3,462 151 4.4% 10.4x 10.0x

GMS Inc. 29.95 81.0% 1,229 1,833 2,319 186 8.0% 9.9x 8.6x

Foundation Building Materials, Inc. 12.11 67.6% 338 838 1,761 80 4.5% 10.5x 5.3x

CanWel Building Materials Group Ltd. 4.98 90.2% 333 518 727 38 5.2% 13.8x 10.9x

Hardwoods Distribution Inc. 15.12 97.9% 320 408 591 35 5.9% 11.8x 8.8x

Huttig Building Products, Inc. 7.13 77.2% 185 255 710 27 3.7% 9.6x NA


Source: FactSet

1

PAGE |

PUBLIC COMPARABLES

15

CONSTRUCTION MATERIALS



As of July 29, 2017


Stock Performance



Aggregates and Cement

LafargeHolcim Ltd. $59.41 97.1% $36,320 $56,525 $26,615 $5,321 20.0% 10.6x 9.1x

CRH Plc 35.17 92.5% 29,311 35,365 28,611 3,457 12.1% 10.2x 9.1x

HeidelbergCement AG 98.58 95.8% 19,608 31,751 16,283 2,855 17.5% 11.1x 8.0x

Vulcan Materials Company 124.00 89.7% 16,271 18,778 3,593 961 26.7% 19.6x 15.8x

Martin Marietta Materials, Inc. 226.50 92.7% 14,182 16,135 3,577 946 26.5% 17.1x 14.5x

Eagle Materials Inc. 91.32 82.5% 4,564 5,093 1,211 355 29.3% 14.3x 9.7x

Summit Materials, Inc. 28.70 96.7% 3,025 4,412 1,488 310 20.8% 14.2x 10.1x

U.S. Concrete, Inc. 77.90 96.8% 1,254 1,651 1,168 146 12.5% 11.3x 7.8x

Median 94.3% $3,585 $953 20.4% 12.8x 9.4x

Heavy Construction Materials

Boral Limited $5.51 99.0% $6,477 $3,936 $3,122 $370 11.8% 10.6x 7.0x

Forterra, Inc. 8.81 38.7% 573 1,750 1,585 171 10.8% 10.3x 8.7x

Median 68.8% $2,353 $270 11.3% 10.5x 7.9x


Source: FactSet

PAGE |

M&A TRANSACTIONS

16



Announced

DateTarget Vertical Business Description Acquirer

7/31/2017 Paragon Windows & Doors Building Products Manufactures residential repair and replacement doors and windows

and mainly sells through dealers.

Sunrise Windows

07/21/2017 Key Resin Company Construction Materials Manufacturer of polymer flooring and coating systems. RPM International

7/16/2017 JPW Industries Building Products Producer of machinery and equipment. Gamut Capital

Management

07/14/2017 Neff Corporation Distribution & Serv ices Construction and industrial equipments rental company. H&E Equipment Serv ices

07/14/2017 Skyfold Inc. Building Products Prov ider of automated vertical folding wall systems. Dormakaba International

7/13/2017 Esmalglass Construction Materials Producer of ceramic colours and glazes. Lone Star

07/10/2017 W-G Seals Building Products Supplier of custom designed floating roof tank seals and rim mounted

foam dams.

Mesa Industries

07/10/2017 Walcro Distribution & Serv ices Distributor of flooring installation products. WILsquare Capital

07/07/2017 Sachs Electric Company Distribution & Serv ices Prov ider of electrical construction serv ices. Oaktree Capital

Management

7/6/2017 Compact Power

Equipment

Distribution & Serv ices National prov ider of equipment rental and maintenance serv ices. Home Depot

07/06/2017 Shimmick Construction Co. Distribution & Serv ices Heavy civ il construction company offering general construction,

construction management, and design-build serv ices to federal, state,

and local public agencies and private customers.

AECOM

07/06/2017 Oakwood Homes Distribution & Serv ices Company engaged in the design and construction of residential houses. CMH Serv ices

07/05/2017 Ceiling and Wall Supply Distribution & Serv ices Distributor of Armstrong suspended ceiling systems, drywall, steel

framing, insulation, and Dryv it products.

Foundation Building

Materials

07/05/2017 Drexel Metals Inc. Building Products Company that designs and fabricates metal roofing systems for both

residential and non-residential applications.

Carlisle Companies

Incorporated

7/1/2017 Carter Waters Construction Materials Distributor of construction supply materials. Construction Supply Group

06/30/2017 SimTek Fence Inc Building Products Manufacturer of fence product using a rotational molding process. CertainTeed Corporation

6/29/2017 Senco Building Products Manufacturer/marketer of branded fastening tools and collated

staples, nails and screws to the construction, industrial (pallets/crates)

and furniture markets.

Kyocera Corp

06/29/2017 Bathwraps Construction Materials Manufacturer of acrylic wetspace walls, tubs and showers. Jacuzzi Brands

06/29/2017 Hydropool Hot Tubs Inc. Building Products Manufacturer and seller of swim spas and hot tubs. Jacuzzi Brands

06/29/2017 Atlantic Door Control Distribution & Serv ices Prov ider of sales, serv ice, and installation of automatic entrance

systems and door controls.

ASSA ABLOY AB

Source: MergerMarket

PAGE |

M&A TRANSACTIONS

17



Announced


06/26/2017 Columbia Shelv ing &

Mirror / Charleston

Shelv ing & Mirror

Distribution & Serv ices Installer of shower doors, shelv ing, mirrors, blinds, gutters, and garage

doors predominantly for single-family residential customers.

Installed Building Products

06/26/2017 Bluegrass Materials

Company

Construction Materials Producer and manufacturer of aggregates and concrete blocks Martin Marietta Materials

06/22/2017 Therma Corporation Building Products Design-build specialty mechanical contractor that focuses on complex

HVAC, high purity process piping and process controls for cleanrooms,

laboratories and high-tech manufacturing facilities.

Gemspring Capital

06/22/2017 RNL Design, Inc. Distribution & Serv ices Architecture, landscape, urban and interior design company. Stantec Inc.

6/19/2017 Hayward Industries Building Products Global manufacturer of residential and commercial pool equipment. CCMP

MSD Partners

Alberta Investment

6/9/2017 Canyon Insulation Building Products Heavy commercial insulation and firestopping company. TopBuild

6/6/2017 Waterworks Distribution & Serv ices Distributor of water, sewer, storm, and fire protection solutions. Clayton, Dubiler & Rice

6/1/2017 Professional Builders Supply Distribution & Serv ices Building materials distributor. Capitol Broadcasting

Company

5/25/2017 Aggregates USA Construction Materials Aggregates USA LLC operates 31 facilities serv ing high growth markets

in Georgia, Florida, Tennessee, South Carolina and Virginia.

Vulcan Materials Company

5/18/2017 Endries Distribution & Serv ices Distributor of fasteners and Class-C parts serv ing industrial OEMs

worldwide.

Nautic Partners

5/4/2017 Arrow Fastener Building Products Nail gun manufacturer. Hangzhour Great Star

Industrial

5/3/2017 LeafFilter Building Products Manufacture of gutter guards. Gridiron Capital

5/3/2017 Gerdau Construction

Products

Construction Materials Producer of steel, located in Brazil. Construction Supply

5/2/2017 WWSC Holdings Building Products Structural steel fabrication and erection company. Alleghany Capital

5/2/2017 Legacy Glass & Supply Building Products Prov ider of shower glass, shelv ing and bathroom mirrors predominately

for single-family residential customers.

Installed Building Products

5/2/2017 Gypsum Wallboard Supply Distribution & Serv ices Distributor of wallboard and suspended ceiling systems. Foundation Building

Materials, LLC

5/2/2017 Lowry's Specialty

Distribution

Distribution & Serv ices Prov ider of residential and commercial roofing materials. Beacon Roofing Supply,

Inc.

5/2/2017 EFCO Corporation Building Products Manufacturer of architectural aluminum window, curtainwall,

storefront, and entrance systems.

Apogee Enterprises

4/25/2017 Arcadia Roofing Distribution & Serv ices Commercial and industrial roofing contractor. Calidant Capital

4/18/2017 River City Building Supply Building Products

Distribution

Distributor of fasteners, fastening equipment and other critical

construction supplies.

SouthernCarlson


PAGE |

M&A TRANSACTIONS

18



Announced


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 US Lumber Distribution & Serv ices Two step distributor of specialty building products. Madison Dearborn

3/20/2017 Advanced Environmental

Recycling Technologies

(AERT)

Building Products &

Serv ices

Manufacturer of composite building materials. Oldecastle Architectural

3/15/2017 Pittsburgh Corning Building Products Producer of cellular glass insulation systems for commercial and

industrial markets.

Owens Corning

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


PAGE |

REPRESENTATIVE BUILDING PRODUCTS & MATERIALS TRANSACTIONS

20




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HARRIS WILLIAMS & CO.

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