www.harriswilliams.com Investment banking services are provided by Harris Williams LLC, a registered broker-dealer and member of FINRA and SIPC, and Harris Williams & Co. Ltd, which is a private limited company incorporated under English law with its registered office at 5th Floor, 6 St. Andrew Street, London EC4A 3AE, UK, registered with the Registrar of Companies for England and Wales (registration number 7078852). Harris Williams & Co. Ltd is authorized and regulated by the Financial Conduct Authority. Harris Williams & Co. is a trade name under which Harris Williams LLC and Harris Williams & Co. Ltd conduct business. BUILDING PRODUCTS & MATERIALS INDUSTRY UPDATE │ FEBRUARY 2017
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www.harriswilliams.com
Investment banking services are provided by Harris Williams LLC, a registered broker-dealer and member of FINRA and SIPC, and Harris Williams & Co. Ltd, which is a private limited company incorporated under English law with its registered office at 5th Floor, 6 St. Andrew Street, London EC4A 3AE, UK, registered with the Registrar of Companies for England and Wales (registration number 7078852). Harris Williams & Co. Ltd is authorized and regulated by the Financial Conduct Authority. Harris Williams & Co. is a trade name under which Harris Williams LLC and Harris Williams & Co. Ltd conduct business.
BUILDING PRODUCTS & MATERIALSINDUSTRY UPDATE │ FEBRUARY 2017
Harris Williams & Co. is pleased to present our Building Products and MaterialsIndustry Update for February 2017. This report provides commentary and analysison current 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.
BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ FEBRUARY 2017
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.
BUILDER CONFIDENCE CONTINUES TO SETTLE BACK TO SUSTAINABLE LEVELS IN FEBRUARY1
CONSTRUCTION JOB GROWTH REBOUNDS IN 20175
ZILLOW: A BUYER'S MARKET EXPECTED NATIONWIDE BY 20192
TRUMP BORDER 'WALL' TO COST $21.6 BILLION, TAKE 3.5 YEARS TO BUILD4
Construction Dive 2/15/2017
West Coast housing markets continue to be the most competitive for home sales nationally while those on the EastCoast and in the Midwest lag, according to a new report from Zillow ranking markets by how long for-sale homes areon the market and the share receiving a price reduction.
Zillow noted that the balance in the country’s top markets is expected to shift in favor of buyers by 2019 amid anoverall slowdown in home-value appreciation. Currently at around 7%, price growth is expected to slow to 3.5% bythe end of 2017.
Read the full article here.
BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ FEBRUARY 2017
CONSTRUCTION FIRMS GETTING SQUEEZED3
NAHB 2/15/2017
Builder confidence in the market for newly-built single-family homes declined two points in February to a level of 65 onthe National Association of Home Builders/Wells Fargo Housing Market Index.
“While builders remain optimistic, we are seeing the numbers settling back into a normal range,” said NAHB ChairmanGranger MacDonald, a home builder and developer from Kerrville, Texas. “With much of the decline this monthresulting from a decrease in buyer traffic, builders continue to struggle to minimize costs while dealing with supply sidechallenges such as a lack of developed lots and labor shortages,” said NAHB Chief Economist Robert Dietz.
Read the full article here.
Reuters 2/9/2017
President Donald Trump’s “wall” along the U.S.-Mexico border would be a series of fences and walls that would costas much as $21.6 billion, and take more than three years to construct, based on a U.S. Department of HomelandSecurity internal report.
The report’s estimated price-tag is much higher than a $12-billion figure cited by Trump in his campaign and estimatesas high as $15 billion from Republican House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell.
Read the full article here.
ACG 2/14/2016
The cost of materials used in construction rose markedly faster than the price of completed buildings, according to anew analysis of federal producer price data released today by the Associated General Contractors of America.Association officials cautioned that potential restrictions on the use of imported construction materials threaten todrive up the price of infrastructure, buildings and new homes and apartments.
Read the full article here.
ABC 2/3/2017
National construction employment started 2017 on a high note, adding 36,000 net new jobs on a seasonally adjustedbasis in January, according to analysis of U.S. Bureau of Labor Statistics. The nonresidential construction sector added14,900 net new jobs for the month, while residential added 20,300 net new jobs. The construction industry added170,000 net new jobs on a yearly basis, an increase of 2.6%.
“Today’s employment report indicated growing strength in construction along a variety of dimensions,” said ABC chiefeconomist Anirban Basu.
* 2016 financials include consensus estimates for companies that have not yet announced full year earnings ** Pro forma EBITDA figures from the presentation for the Rugby Architectural Building Products acquisition
As of February 28, 2017
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Construction Materials
Stock Performance
Current % of 2016 TEV / EBITDA EBITDA
($ in millions except per share data) Price LTM High Mkt. Cap TEV Rev. EBITDA Margin 2016 2017E
Harris Williams & Co. has a broad range of industry expertise, which creates powerful opportunities.Our clients benefit from our deep-sector experience, integrated industry intelligence andcollaboration across the firm, and our commitment to learning what makes them unique. For moreinformation, visit our website at www.harriswilliams.com/industries.
OUR FIRM
BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ FEBRUARY 2017
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HARRIS WILLIAMS & CO.
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BUILDING PRODUCTS & MATERIALS
INDUSTRY UPDATE │ FEBRUARY 2017
DISCLOSURES
SOURCES
Harris Williams & Co. (www.harriswilliams.com) is a preeminent middle market investment bank focused on the advisory needs of clients worldwide. The firm has deep industry knowledge, global transaction expertise, and an unwavering commitment to excellence. Harris Williams & Co. provides sell-side and acquisition advisory, restructuring advisory, board advisory, private placements, and capital markets advisory services.
Investment banking services are provided by Harris Williams LLC, a registered broker-dealer and member of FINRA and SIPC, and Harris Williams & Co. Ltd, which is a private limited company incorporated under English law with its registered office at 5th Floor, 6 St. Andrew Street, London EC4A 3AE, UK, registered with the Registrar of Companies for England and Wales (registration number 7078852). Harris Williams & Co. Ltd is authorized and regulated by the Financial Conduct Authority. Harris Williams & Co. is a trade name under which Harris Williams LLC and Harris Williams & Co. Ltd conduct business.
THIS REPORT MAY CONTAIN REFERENCES TO REGISTERED TRADEMARKS, SERVICE MARKS AND COPYRIGHTS OWNED BY THIRD-PARTY INFORMATION PROVIDERS. NONE OF THE THIRD-PARTY INFORMATION PROVIDERS IS ENDORSING THE OFFERING OF, AND SHALL NOT IN ANY WAY BE DEEMED AN ISSUER OR UNDERWRITER OF, THE SECURITIES, FINANCIAL INSTRUMENTS OR OTHER INVESTMENTS DISCUSSED IN THIS REPORT, AND SHALL NOT HAVE ANY LIABILITY OR RESPONSIBILITY FOR ANY STATEMENTS MADE IN THE REPORT OR FOR ANY FINANCIAL STATEMENTS, FINANCIAL PROJECTIONS OR OTHER FINANCIAL INFORMATION CONTAINED OR ATTACHED AS AN EXHIBIT TO THE REPORT. FOR MORE INFORMATION ABOUT THE MATERIALS PROVIDED BY SUCH THIRD PARTIES, PLEASE CONTACT US.
The information and views contained in this report were prepared by Harris Williams & Co. (“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 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 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.