BUILDING PRODUCTS & MATERIALS - Harris Williams · PAGE | BUILDING PRODUCTS & MATERIALS GROUP OVERVIEW 1 CONTENTS WHAT WE’RE READING PUBLIC MARKETS PUBLIC COMPARABLES M&A ACTIVITY

www.harriswilliams.de

Harris Williams & Co. Ltd is a private limited company incorporated under English law having its registered office at 5th Floor, 6 St. Andrew Street, London EC4A 3AE, UK, registered withthe Registrar of Companies for England and Wales under company number 7078852. Directors: Mr. Ned Valentine, Mr. Paul Poggi, Mr. Thierry Monjauze and Mr. Aadil Khan, authorisedand regulated by the Financial Conduct Authority.

Harris Williams & Co. Ltd Niederlassung Frankfurt (German branch) is registered in the Commercial Register (Handelsregister) of the Local Court (Amtsgericht) of Frankfurt am Main,Germany, under registration number HRB 96687, having its business address at Bockenheimer Landstrasse 33-35, 60325 Frankfurt am Main, Germany. Permanent Representative(Ständiger Vertreter) of the Branch Niederlassung: Mr. Jeffery H. Perkins.

BUILDING PRODUCTS & MATERIALSINDUSTRY UPDATE │ JULY 2016

PAGE |

BUILDING PRODUCTS & MATERIALS GROUP OVERVIEW

1

CONTENTS

WHAT WE’RE READING

PUBLIC MARKETS

PUBLIC COMPARABLES

M&A ACTIVITY

CONTACTS

Mike HoganManaging Director

[email protected]+1 (804) 915-0104

Ryan NelsonManaging [email protected]+1 (804) 915-0121

Trey PackardVice [email protected]+1 (804) 887-6016

INTRODUCTION

Harris Williams & Co. is pleased to present our Building Products and MaterialsIndustry Update for July 2016. 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.

BUILDING PRODUCTS & MATERIALS

INDUSTRY UPDATE │ JULY 2016

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

www.harriswilliams.de

Construction

Materials

Building

Products

Distribution &

Services has been acquired by

a portfolio company of

Select Atlanta, Georgia

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has been acquired by





a subsidiary of





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http://www.harriswilliams.com/

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RECENT MOMENTUM IN BUILDING PRODUCTS & MATERIALS





Generation Brands

Leading designer of decorative and functional lighting products serving residential and commercial construction markets through six distinct brands

Provides a comprehensive line of lighting fixtures to 4,000+ showrooms, electrical distributors, homebuilders, and online retailers

Maintains a portfolio of leading brands averaging 60+ years in operation

Boxley Materials

A vertically-integrated producer of construction materials, primarily supplying aggregate, ready-mix concrete, asphalt and paving, and architectural products in central and southwestern Virginia

Boxley’s high-quality products, superior customer service, and strong culture make it the supplier of choice in its markets

Maintains a high-quality asset base of aggregate reserves with modernized plants and equipment

Ennis-Flint

A global leader in pavement markings and traffic safety solutions

#1 market position across its core portfolio of products, serving a highly-diverse base of over 4,000 customers

Global manufacturing presence with 20 facilities across six countries worldwide

Harvey

Leading building products supplier focused on Northeast region

Founded in and family-owned since 1961, with headquarters outside Boston in Waltham, MA

Vertically-integrated window and door manufacturer and distributor

Distributes broad line of exterior building products including windows, siding, and roofing to over 44,000 customers annually through its network of 33 warehouses

2





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WHAT WE’RE READING

3

CONSTRUCTION EMPLOYMENT STAGNANT IN JUNE AS UNEMPLOYMENT RATE FALLS TO 16-YEAR LOW

10 YEARS AFTER PEAK, HOME PRICES ARE RISING

LOW INVENTORY WILL CONTINUE TO PLAGUE HOUSING MARKET THROUGH 2016

MAY CONSTRUCTION STARTS RISE 5%

Construction Dive 7/8/2016

The shortage of housing inventory will continue to be the market's big story for the second half of 2016, Forbes reported. According to Zillow, May inventory of low- (8.9%) and middle-tier (9.7%) homes dropped from May 2015, while top-tier inventory fell 0.5%. In May, the annual rate of single-family home groundbreakings was 1.138 million, below the projected 1.5 million necessary to catch up to demand; however, builders are focusing on luxury homes, pushing those entry-level buyers looking for a starter home further out of the market.

Read the full article here.



U.N. PUSHES SUSTAINABLE URBAN DEVELOPMENT

Construction Dive 7/11/2016

Construction employment remained unchanged at 6,643,000 from May to June but was up 3.4% (217,000) year overyear, according to an analysis of U.S. Bureau of Labor Statistics data by the Associated General Contractors ofAmerica. The construction unemployment rate dipped to 4.6% month over month, the lowest rate since 2000. Wagesgrew 2.8% from June 2015 to $28.13, and weekly hours worked increased to 39.2 for the same period, indicating thatconstruction employers are experiencing difficulty finding skilled workers.


Dodge 6/24/2016

At a seasonally adjusted annual rate of $636.7 billion, new construction starts in May increased 5% from April,according to Dodge Data & Analytics. Much of the growth came from the non-building construction sector (publicworks and electric utilities), which was lifted by a $3.8 billion oil pipeline in the upper Midwest as well as by sevenpower plant projects with a combined cost of $4.3 billion.


CityLab 7/8/2016

Late September is always a busy time at the United Nations, but last year’s General Assembly session was especiallyhistoric. That’s when all 193 nations represented at the U.N. formally agreed to an ambitious set of 17 “SustainableDevelopment Goals” — a framework to coordinate global efforts for ending poverty and hunger, combatinginequality and disease, slowing climate change and building peace. Pope Francis, Nobel laureate Malala Yousafzaiand the pop singer Shakira all took the stage in support. Many of the world’s mayors were there, too. They came toemphasize the vital role cities have to play in this global effort.


Remodeling 7/17/2016

It’s been 10 years since the peak of the U.S. home price bubble. David Stiff, for CoreLogic, notes that CoreLogic'sCase-Shiller Home Price Index dropped 27% during the next six years after reaching its peak in July 2006. Now, thenational index remains 4% below its peak. But in certain markets, prices have rebounded nicely. In 40% of metros,prices are at new peaks and another 30% are within 10% of their previous peak. Stiff adds that the country should notfear another housing market crash in the near future because its current success is built on fundamentals, like jobgrowth and rising demand.


http://www.constructiondive.com/news/low-inventory-will-continue-to-plague-housing-market-through-2016/422267/

http://www.constructiondive.com/news/construction-employment-stagnant-in-june-as-unemployment-rate-falls-to-16-y/422347/

http://construction.com/about-us/press/May-Construction-Starts-Rise-5-Percent.asp

http://www.citylab.com/weather/2016/07/cities-turn-to-implementing-the-sustainable-development-goals/490490/

http://www.remodeling.hw.net/newsletter/10-years-after-peak-home-prices-are-rising_c

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ECONOMIC UPDATE

4

INDUSTRIAL PRODUCTION INDEX


GROSS DOMESTIC PRODUCT

Real GDP increased by an annual rate of1.1% in the first quarter of 2016, and hasincreased 2.1% YoY

Current dollar GDP increased 0.4%, or$65.3 billion in the first quarter to a level of$18.2 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 0.7% in the firstquarter of 2016

Industrial production decreased 0.4% inMay after increasing 0.6% in April; it is down1.4% YoY since May 2015

Capacity utilization for the industrial sectorfell 0.3% in May to 74.9% and is down 1.7%since May 2015

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%

Q1

2007

Q1

2008

Q1

2009

Q1

2010

Q1

2011

Q1

2012

Q1

2013

Q1

2014

Q1

2015

Q1

2016

94

96

98

100

102

104

106

108

110

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ECONOMIC UPDATE

5

PERSONAL CONSUMPTION EXPENDITURES

ECONOMIC SENTIMENT

In May, personal income decreased$23.1 billion, or 3.1%, while personalconsumption expenditures (PCE)increased $53.5 billion, or 0.4%

Wages and salaries were flat in March,after being flat in February andincreasing 0.7% in January

Purchases of durable goods fell 2.3% inMay compared to an increase of 3.2% inApril; while purchases of non-durablegoods increased 0.5%, compared to anincrease of 0.1% in April

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. decreased by 0.2% inMay to 123.7, following a 0.6% increase inApril, and a 0.1% increase in March

Even with the May decrease, the LEI is up1.2% YoY since May 2015

The continued rise in LEI suggests economicgrowth will remain moderate in 2016 withlittle reason to expect growth to pick upsubstantially



(Percentage change in 3-month rolling average)

(Indexed to 2010)

Source: Conference Board Leading Economic Index (LEI)


(0.2%)

(0.1%)

0.0%

0.1%

0.2%

0.3%

0.4%

0.5%

0.6%

0.7%

May-10 May-11 May-12 May-13 May-14 May-15 May-16

100

105

110

115

120

125

130

May-13 Nov-13 May-14 Nov-14 May-15 Nov-15 May-16

PAGE | 6

ECONOMIC UPDATE

CONSUMER CONFIDENCE INDEX (CCI)

KEY INTEREST RATES

The Consumer Confidence Indexincreased to 98.0 in June, up from 92.4 inMay

Consumer confidence is currently up0.2% over the last six months, and down1.8% since June 2015

Consumers’ appraisal of currentconditions was mixed in June. Thosesaying business conditions are “good”increased from 26.1% to 26.9%; thosesaying business conditions are “bad”decreased from 21.4% to 17.7%

Consumers had mixed feelings aboutthe labor market. The proportionclaiming jobs are “plentiful” decreasedfrom 24.5% to 23.4%, but those claimingjobs are “hard to get” also decreased to24.5% from 23.3%

The 30-year mortgage rate decreased inJune 2016 to 3.57%

The current mortgage rate is 40 basispoints lower than the rate from June 2015



Seasonally-Adjusted

(Indexed to 1985)


Source: Conference Board

0%

1%

2%

3%

4%

5%

6%

7%

8%

30-Year Treasury Rate

10-Yr Treasury Rate

Effective Federal Funds Rate

0

20

40

60

80

100

120

PAGE | 7

ECONOMIC UPDATE

U.S. NON-RESIDENTIAL CONSTRUCTION

U.S. HOUSING STARTS



Non-residential construction has laggedin recovery but has increased 1.2% sinceMay of 2015

Non-residential construction decreasedby 1.3% from April to May, but hasincreased 0.8% over the last six months

In the release of its estimates forNovember 2015, the U.S. Census Bureaurestated each of its monthly estimatesgoing back to January 2005, citing aprocessing error in the tabulation of data

Seasonally-Adjusted Annual Rate

($ in billions)

U.S. housing starts in May decreased 0.3%over April, and increased 9.5% YoY

Decreases were driven by a 1.2% MoMdecrease in multi-family homes whilesingle-family homes increased 0.3%

Housing starts continue to rebound fromunprecedented lows reached in 2009,yet remain ~20% below the 50-yearaverage of 1.4 million starts per year

(Units in 000’s)

May 2016 Annualized Starts: 1,164MoM Δ: (0.3%)YoY Δ: 9.5%

Source: U.S. Census Bureau

Source: U.S. Census Bureau

50-year average of 1,441 starts

(12.0%)

(8.0%)

(4.0%)

0.0%

4.0%

8.0%

12.0%

$450

$500

$550

$600

$650

$700

$750

Non-Residential Construction MoM Change

0

500

1,000

1,500

2,000

2,500

3,000

1966 1971 1976 1981 1986 1991 1996 2001 2006 2011 2016

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30

35

40

45

50

55

60

65

70

Q1 2008 Q1 2010 Q1 2012 Q1 2014 Q1 2016

8

ECONOMIC UPDATE

RESIDENTIAL HOUSING SPENDING

NAHB REMODELING MARKET INDEX (RMI)

Total residential building spending for2016 is projected to be $412 billion, 7.3%up from $382 billion in 2015

Residential building spending increasedat a 10.0% CAGR between 2012 and2015

FMI projects that spending will increaseat an 8.6% CAGR from 2016E through2019P

The Q1 RMI was 68 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 decline of 12.7% year-over-yearin the first quarter



2016E – 2019P CAGR: 8.6%

$249$253

$287

$342 $354$382

$412$447

$486

$527

0

100

200

300

400

500

600

2010 2011 2012 2013 2014 2015 2016E 2017P 2018P 2019P

Single-Family Multi-Family Improvements*

*Improvements includes additions, alterations, and major replacements. Itdoes not include maintenance and repairs.

($ in billions)

Source: FMI Consulting

2012 – 2015 CAGR: 10.0%

Source: NAHB

Seasonally-Adjusted Annual Rate

PAGE |

0

10

20

30

40

50

60

70

80

9

M&A MARKET TRENDS

MARKET OBSERVATIONS

BUILDING PRODUCTS QUARTERLY M&A ACTIVITY

After a record year for M&A in 2015, 16.2% higher than 2007’s previous peak, there has been a cooling downperiod through the first half of 2016, with global M&A re-balancing towards a more sustainable level

First half 2016 global M&A volume totaled $1.5 trillion

– Activity in Western Europe accounted for nearly one third of global M&A volume, with North Americaaccounting for just over 20%

North American building products deal activity was up 8.0% in Q2 compared to Q1 2016



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

Total Transactions: 270

YoY Change: 55.2%


YoY Change: (2.6%)


YoY Change: 1.5%


YoY Change: (18.7%)


YoY Change: 11.5%


YoY Change: (3.3%)

Q1 2010

Q1 2011

Q1 2012

Q1 2013

Q1 2014

Q1 2015

Source: Mergermarket

Q1 2016

PAGE | 10

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 newconstruction and remodeling

Prices have strengthened over the past quarter after their depressedlevels from Q4 2015 through Q1 2016

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 residentialapplications 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 millionsquares in 2019, valued at approximately $21.4 billion dollars

Demand for roofing is closely linked to building construction expenditures, buthas been more sheltered than other building products markets from thehousing slump due to the non-discretionary need for roof repair andreplacement

Houses need to be re-roofed every fifteen years on average and the agingU.S. housing stock will drive continued demand for replacement

Additionally, renewed strength in new housing construction and a generallystronger economic climate will support growth

Roofing Demand by Primary Segment

Description

Windows and doors market includes metal, wood, and vinyl windowsand doors for residential and non-residential end markets


Window and door demand is primarily driven by new commercial andresidential construction, as well as repair and remodel spending

Quarterly remodeling spend decreased 0.6% during Q1 2016, following adip in Q4 2015. Spend for Q1 was ~$141 billion

Continued strength in home prices has increased homeowners’ equityand demand for remodeling work, providing a strong tailwind for thewindow and door industry

Leading Indicator of Remodeling Activity – LIRA ($ 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

$80

$130

$180

$230

$280

$330

$380

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

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11

WALLBOARD AND PLASTER

HVAC

PLUMBING FIXTURES AND FITTINGS

Description

Primarily made from gypsum, products include wallboard, plaster,plasterboard, molding, ornamental moldings, statuary, andarchitectural plasterwork


Gypsum product demand is primarily driven by new commercial andresidential construction, as well as repair and remodel spending

Over the past two years, rising wallboard prices and cost-savingmeasures have improved industry profit margins

New home inventories remain low and as demand for new homes hasgrown, builders have begun increasing their stock

U.S. Wallboard Demand Outlook

($ in millions)

U.S. HVAC Demand Outlook($ in millions)

Plumping Equipment Industry Revenue Outlook($in millions)



Description

Residential, commercial, and industrial heating, ventilation, airconditioning, and refrigeration equipment


U.S. shipments of central air conditioners and air-source heat pumpsdropped modestly in 2015 compared to 2014

HVAC demand is primarily driven by residential and non-residentialconstruction, 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 andcorresponding tax credits are driving replacement demand

Turnaround specialists Melrose Industries announced the acquisition ofNortek, a U.S. public company offering a variety of home productsincluding ventilation, for $1.4 billion on July 6th, 2016

Description

Plumbing fixtures, bathtub and shower fixtures, and indoor pipesconstitute this segment


Through 2018, U.S. demand for plumbing fixtures and fittings isprojected to advance ~3% annually to nearly $55 billion

Primary demand determinants are repair and remodel spending, newhome construction, and non-residential improvement and repair

Industry regulatory bodies continue to focus on water efficiency, withstates leading the way on new codes

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

2007 2009 2011 2013 2015 2017P

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

2007 2009 2011 2013 2015 2017P

Source: IBIS World

Source: IBIS World

Source: IBIS World

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

2007 2009 2011 2013 2015 2017P

PAGE |

1,200 1,200 1,200 1,220 1,230 1,310 1,390

838 807 812 820 850904

931

0

500

1,000

1,500

2,000

2,500

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


12

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, MartinMarietta, Vulcan Materials, and a large number of independentoperators

White limestone loadings in the U.S. have decreased of late, but demandis expected to grow strongly in the coming years

U.S. Aggregates Consumption (values in millions of metric tons)

Description

Paving and roofing materials include asphalt and tar-paving mixtures andblocks, shingles, roofing cements, and coatings


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

Resurgent U.S. housing activity and recent government infrastructureprograms have supported asphalt shingle and roofing cement demand

According to the National Asphalt Paving Association (NAPA), nearly athird of all asphalt is produced with warm-mix asphalt technologies, upfrom less than 5% in 2009

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 productioncapacity

Concrete has been gaining share over asphalt since 2008

U.S. cement capacity and import terminals are largely owned orcontrolled by international producers

The recent passage of the FAST act provides some certainty for thecement and concrete industry, but industry leaders are still calling forincreased funding to support a refurbishing of U.S. water infrastructure anda modernized airport system

U.S. Cement Demand Outlook ($ in millions)

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

2007 2009 2011 2013 2015 2017P

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



13

MEDIAN TEV / 2016E EBITDA

MEDIAN REVENUE GROWTH (2016E – 2017P)

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

MEDIAN CAPEX / 2016E REVENUE

MEDIAN REVENUE GROWTH (2012 – 2016E)

HISTORICAL STOCK PRICES (JULY 14TH, 2011 – JULY 14TH, 2016)

HISTORICAL MEDIAN TEV / NTM EBITDA (JULY 14TH, 2011 – JULY 14TH, 2016)

60

80

100

120

140

160

180

200

220

240

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

8.7x

8.8x

9.4x

Construction Materials

Building Products Distributors

Building Products

9.2%

8.1%

6.9%



Building Products

7.5%

8.8%

5.8%



Building Products

19.2%

6.6%

15.6%



Building Products

14.9%

4.9%

12.6%



Building Products

6.3%

1.1%

3.3%



Building Products

PAGE |

PUBLIC COMPARABLES

14

BUILDING PRODUCTS



As of July 14, 2016

Building Products

Stock Performance

Current % of 2016E TEV / EBITDA EBITDA

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

Windows & Doors

Masonite International Corp. $66.85 91.3% $1,863 $2,518 $2,027 $254 12.5% 9.9x 8.5x

Ply Gem Holdings, Inc. 14.30 91.0% 854 1,904 1,964 232 11.8% 8.2x 7.0x

Tyman Plc 3.19 60.8% 749 659 572 95 16.6% 6.9x 6.2x

Quanex Building Products Corporation 19.02 87.8% 641 936 963 118 12.2% 7.9x 7.1x

PGT, Inc. 10.37 63.7% 556 758 466 82 17.5% 9.3x 7.8x

Median 87.8% $963 $118 12.5% 8.2x 7.1x

Roofing, Decking & Siding

Kingspan Group Plc $20.22 70.0% $4,675 $4,022 $3,390 $395 11.7% 10.2x 9.7x

USG Corporation 26.65 81.1% 3,538 5,478 3,996 689 17.2% 8.0x 7.1x

Trex Company, Inc. 45.03 89.0% 1,176 1,482 472 117 24.9% 12.6x 11.1x

Continental Building Products, Inc. 22.09 92.9% 729 1,190 454 140 30.9% 8.5x 7.9x

Median 85.0% $1,931 $268 21.0% 9.3x 8.8x

Cabinets, Plumbing / HVAC

Masco Corporation $30.55 92.8% $9,353 $12,309 $7,445 $1,187 15.9% 10.4x 9.5x

Fortune Brands Home & Security, Inc. 57.76 96.3% 8,875 10,525 5,106 773 15.1% 13.6x 11.9x

Lennox International Inc. 142.65 99.1% 5,580 7,436 3,650 523 14.3% 14.2x 12.9x

American Woodmark Corporation 67.63 75.2% 1,186 936 1,058 119 11.2% 7.9x 6.9x

Median 94.5% $4,378 $648 14.7% 12.0x 10.7x

Hardware

ASSA ABLOY AB $19.94 89.9% $23,452 $24,841 $8,397 $1,513 18.0% 16.4x 15.0x

Simpson Manufacturing Co., Inc. 39.32 97.1% 1,645 1,673 859 167 19.4% 10.0x 9.0x

Richelieu Hardware Ltd 20.21 99.5% 1,044 1,202 654 73 11.1% 16.5x 14.9x

Median 97.1% $859 $167 18.0% 16.4x 14.9x

Glass / Building Systems

Owens Corning $52.60 98.9% $5,451 $8,066 $5,578 $978 17.5% 8.2x 7.6x

Apogee Enterprises, Inc. 46.15 79.1% 1,130 1,289 1,077 155 14.4% 8.3x 7.2x

NCI Building Systems, Inc. 16.00 96.2% 775 1,507 1,675 158 9.4% 9.6x 8.2x

Median 96.2% $1,675 $158 14.4% 8.3x 7.6x

Flooring

Mohawk Industries, Inc. $186.19 87.8% $14,001 $17,051 $8,938 $1,666 18.6% 10.2x 9.6x

Armstrong World Industries, Inc. 37.71 62.1% 2,532 2,923 1,376 324 23.6% 9.0x 8.5x

Interface, Inc. 15.29 56.3% 1,261 1,154 995 144 14.4% 8.0x 7.1x

Median 62.1% $1,376 $324 18.6% 9.0x 8.5x

Overall Median 89.4% $1,525 $199 15.5% 9.4x 8.3x

PAGE |

PUBLIC COMPARABLES

15

BUILDING PRODUCTS DISTRIBUTORS



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

As of July 14, 2016


Stock Performance



Wolseley plc $5.02 72.4% $17,412 $14,756 $19,759 $1,525 7.7% 9.7x 9.2x

HD Supply Holdings, Inc. 33.86 92.0% 5,257 10,837 7,548 960 12.7% 11.3x 10.4x

Beacon Roofing Supply, Inc. 46.18 98.0% 1,618 3,797 4,184 348 8.3% 10.9x 9.9x

Builders FirstSource, Inc. 11.26 67.5% 1,216 3,161 6,540 421 6.4% 7.5x 6.2x

BMC Stock Holdings, Inc. 17.66 88.3% 1,094 1,575 3,154 186 5.9% 8.4x 6.9x

Hardwoods Distribution Inc. 12.14 85.4% 217 233 990 65 6.6% 4.7x 3.8x

CanWel Building Materials Group Ltd. 4.25 88.0% 146 343 746 39 5.3% 8.7x 7.1x

Huttig Building Products, Inc. 6.00 93.5% 95 209 710 21 3.0% 9.9x 7.7x

Goodfellow Inc. 8.48 92.5% 66 149 452 17 3.8% 8.8x 8.3x


1

PAGE |

PUBLIC COMPARABLES

16

CONSTRUCTION MATERIALS



As of July 14, 2016


Stock Performance



Aggregates and Cement

LafargeHolcim Ltd. $40.71 53.0% $30,430 $48,133 $29,624 $6,374 21.5% 7.6x 7.5x

CRH Plc 27.88 88.4% 23,708 30,441 31,319 3,503 11.2% 8.7x 7.9x

HeidelbergCement AG 73.60 80.1% 15,437 21,187 15,623 3,235 20.7% 6.5x 5.8x

Vulcan Materials Company 119.66 98.7% 12,647 17,998 3,924 1,106 28.2% 16.3x 13.2x

Martin Marietta Materials, Inc. 186.77 96.3% 8,807 13,747 3,654 1,032 28.2% 13.3x 11.2x

Eagle Materials Inc. 76.11 87.4% 3,402 4,313 1,227 422 34.4% 10.2x 9.0x

Summit Materials, Inc. 20.05 73.0% 1,197 2,561 1,541 369 23.9% 6.9x 6.0x

Median 87.4% $3,924 $1,106 23.9% 8.7x 7.9x

Heavy Construction Materials

James Hardie Industries PLC Chess Units of Foreign Securities$15.44 96.7% $6,122 $7,338 $1,893 $497 26.2% 14.8x 13.1x

Boral Limited 4.56 88.5% 3,436 4,206 3,301 478 14.5% 8.8x 8.2x

Headwaters Incorporated 17.80 81.8% 1,389 1,852 1,002 195 19.5% 9.5x 8.4x

U.S. Concrete, Inc. 59.54 85.5% 783 1,168 1,210 170 14.0% 6.9x 5.9x

Median 87.0% $1,551 $336 17.0% 9.1x 8.3x

Cabinets, Plumbing / HVAC

Weyerhaeuser Company $29.70 90.8% $15,304 $27,608 $7,304 $1,815 24.8% 15.2x 13.3x

West Fraser Timber Co. Ltd. 28.72 52.2% 3,118 2,910 3,450 472 13.7% 6.2x 5.0x

Louisiana-Pacific Corporation 17.39 91.7% 2,575 2,875 2,181 275 12.6% 10.5x 9.5x

Canfor Corporation 10.29 46.3% 1,930 1,997 3,264 370 11.3% 5.4x 4.5x

Universal Forest Products, Inc. 95.27 99.2% 1,387 1,955 3,124 202 6.5% 9.7x 9.1x

Norbord Inc. 19.13 85.2% 1,657 2,431 1,722 309 17.9% 7.9x 6.5x

Boise Cascade Co. 21.43 58.0% 991 1,226 3,921 160 4.1% 7.7x 6.1x

Median 85.2% $3,264 $309 12.6% 7.9x 6.5x


PAGE |

M&A TRANSACTIONS

17



Announced

DateTarget Vertical Business Description Acquirer

7/7/2016 Marketing Associates, Inc.

(North Carolina)

Building Products Manufactures, supplies, and installs specialist construction products,

including bridge expansion joints, concrete repair compounds,

protective coatings, and pavement preservation products.

RPM International, Inc.

7/6/2016 Nortek, Inc. Building Products Manufactures and distributes building ventilation products for residential

and commercial applications.

Melrose Industries Plc

7/6/2016 RockWise LLC Building Products Supplies drywall and stucco to professional contractors in Arizona and

Colorado.

GMS, Inc.

6/29/2016 Eastern Industries Corp. Construction Materials The company provides building supplies, hot-mix asphalt, masonry block,

ready-mix concrete, road oils, stone and other construction materials.

Precision Punch Corp.

6/27/2016 NYCON Supply Corp. Construction Materials Supplies concrete products for construction, municipal work, road

construction, city sidewalks, and homeowners projects.

U.S. Concrete, Inc.

6/22/2016 Lake States Lumber, Inc. Building Products

Distribution

Wholesales and distributes building materials. I t offers manufacturing,

factory refinishing, and wood preserv ing.

Cedar Creek, Inc.

6/15/2016 The Bilco Co. Building Products Manufactures building products. I t offers roof hatches, smoke vents,

floor access doors, safety products, intrusion detection, bilco basement

doors, egress window wells, and perm entry entrance.

Tyman Plc

6/13/2016 Ennis-Flint Building Products Ennis-Flint is the world leader in pavement markings and traffic safety

solutions.

Olympus Partners

6/13/2016 Rugby Architectural

Building Products

Building Products

Distribution

Rugby Architectural Building Products distributes non-structural

architectural grade building products to customers that supply end-

products to the commercial market.

Hardwoods Distribution

6/13/2016 Lumotech, Certain assets

in Europe

Building Products Lumotech is a manufacturer of specialty LED products with a focus on

rechargeable, emergency lighting.

Fulham Company Group

6/10/2016 Generation Brands Building Products Generation Brands is a leading designer of decorative and functional

lighting products serv ing residential and commercial construction

markets.

AEA Investors

6/10/2016 Panolam Surface Solutions Building Products Panolam Surface Systems is a designer and manufacturer of highly-

engineered, integrated surface solutions including high-pressure

laminates, thermally-fused laminates, and other specialty products.

Insight Equity

6/8/2016 Exteria Building Products Building Products Exteria Building Products LLC manufactures sides, windows, fascia,

roofing, and gutters serv ices. I ts products include cape cod perfection,

scalloped perfection, hand-split shake, and cedar pride.

Novik Inc.

6/7/2016 Monofrax Building Products Monofrax is engaged in the manufacturing of fused cast refractory for

glass manufacturers.

Callista Private Equity

6/6/2016 KITH Kitchens LLC Building Products KITH Kitchens LLC provides customizable kitchen and bath cabinets. I t

offers full lines of both framed and frameless cabinetry with an expertise

in hand-painted finishes.

Pfingsten Partners LLC

6/2/2016 Johnson Insulation, Certain

assets

Building Products

Distribution

Johnson Insulation specializes in laminating metal building insulation. Distribution International

6/1/2016 Raymond Building Supply

Corp.

Building Products

Distribution

Raymond Building Supply Corp. supplies residential and commercial

building products. I ts products include millwork, plywood, trusses ,and

Andersen windows.

U.S. LBM

6/1/2016 Woodfeathers, Inc. Building Products Woodfeathers, Inc. manufactures and supplies roofing materials to

homeowners, builders, architects, and contractors.

Beacon Roofing Supply,

Inc.

5/26/2016 Albuquerque Hardwood

Lumber Co.

Building Products

Distribution

Albuquerque Hardwood Lumber Co. wholesales and supplies wood

products. I t sells hardwood lumber, wood panels, and related

hardware.

Rugby IPD Corp

5/24/2016 TekModo Building Products TekModo is a manufacturer and seller of composite panels that are

currently being used in the walls, roofs, floors and doors of RVs, buses

and trailers.

CarbonOne Technologies

PAGE |

M&A TRANSACTIONS

18



Announced


5/20/2016 Lamin-Art, Inc. Building Products Lamin-Art designs and manufactures laminates and decorative

surfaces.

Arborite

5/9/2016 Universal Building

Specialties Incorporated

Building Products

Distribution

Universal Building Specialties Incorporated distributes building products. Cedar Creek Inc.

5/6/2016 SEI Group, Inc. Building Products SEI Group, Inc. prov ides construction contracting serv ices for single

and multi-family homes.

Narrow Gauge Capital

5/4/2016 Sierra Ready Mix, LLC Construction Materials Sierra Ready Mix, LLC supplies ready mix concrete in Las Vegas,

Nevada.

Summit Materials, Inc.

5/2/2016 CEMEX, S.A.B. de C.V.,

Certain assets in U.S.

Construction Materials CEMEX, S.A.B. de C.V., Certain assets in U.S. comprises cement plants,

three cement terminals, and the building materials business.

Grupo Cementos de

Chihuahua SAB de CV

5/2/2016 Fox Brothers Company Building Products

Distribution

Fox Brothers Company supplies exterior building materials for new

construction and remodeling projects in Michigan.


Inc.

4/30/2016 Masonite Architectural

Door Company, Plant in

Fredericksburg

Building Products Masonite Architectural Door Company's plant in Fredericksburg was

acquired by The Lester Group, Inc. The plant manufactures and pre-

finishes commercial doors.

The Lester Group, Inc.

4/29/2016 Surface Encounters LLC Building Products Surface Encounters LLC fabricates granite and quartz countertops for

kitchens, bathrooms, and bars in Michigan and Indiana.

Cutting Edge Countertops

Inc.

4/18/2016 Athabasca Minerals Inc.,

DML 150166, DML 150171

And DLO 150210

Construction Materials Athabasca Minerals Inc., DML 150166, DML 150171 And DLO 150210

comprise industrial minerals deposits.

Wayfinder Corp.

4/15/2016 United States Pipe and

Foundry Company, LLC

Building Products United States Pipe and Foundry Company, LLC manufactures and sells

fabricated/grooved ductile iron pipes and fittings for water and

wastewater industries in the United States and internationally.

Forterra Building Products

4/11/2016 Fomo Products, Inc. Building Products Fomo Products, Inc. manufactures low pressure polyurethane (PU) foam

insulation, sealants, adhesives, and spray foam systems in pressurized

packaging.

ICP Adhesives and

Sealants, Inc.

4/1/2016 House Of Threads, Inc. Building Products

Distribution

House Of Threads, Inc. markets and distributes fasteners. Wurth Group Of North

America Inc.

4/5/2016 Tierra Sol Ceramic Tile Ltd. Building Products

Distribution

Tierra Sol Ceramic Tile Ltd. distributes ceramic and porcelain tiles,

glass/metal products, natural stones, and setting products to designers,

architects, contractors, and retailers.

Shnier Gesco Limited

Partnership

4/5/2016 Blue Max Materials, Inc. Construction Materials Blue Max Materials, Inc. offers a selection of landscape and hardscape

materials to professional contractors and do-it-yourself homeowners for

their landscaping needs.

SiteOne Landscape Supply,

Inc.

4/4/2016 Benbilt Building Systems LP Building Products

Distribution

Benbilt Building Systems LP is engaged in the wholesale distribution of

doors to builders and remodelers.

Huttig Building Products

Inc.

4/5/2016 Boston Cedar, Inc. Building Products

Distribution

Distributes building materials including siding, trim, decking, railing, and

millwork products.

U.S. LUMBER GROUP, LLC

4/4/2016 United Subcontractors,

Inc.

Building Products United Subcontractors, Inc. prov ides insulation, specialty, and shell

construction serv ices for residential and commercial projects.

Hennessy Capital

Acquisition Corp.

4/1/2016 L. M. Scofield Company Construction Materials L. M. Scofield Company manufactures decorative concrete products. Sika AG

4/1/2016 Strickland Bridge, Inc. Construction Materials Strickland Bridge, Inc. manufactures concrete. U.S. Concrete, Inc.

4/1/2016 Atlantic Building Products,

Inc.

Building Products

Distribution

Atlantic Building Products, Inc. is a building supply dealer that prov ides

building products to contractors and homeowners.


Inc.

PAGE |

M&A TRANSACTIONS

19



Announced


4/1/2016 LYF-TYM Building Products

Co, Inc.

Building Products LYF-TYM Building Products Co, Inc. manufactures and distributes low-

maintenance exterior building products.


Inc.

4/1/2016 Professional Handling and

Distribution, Inc.

Building Products

Distribution

Professional Handling and Distribution, Inc. distributes drywall and

related products for commercial and residential customers in the

greater Chicagoland and Rockford areas.

GMS Inc.

3/31/2016 American Lumber

Corporation

Building Products American Lumber Corporation, also known as ALCO Doors,

manufactures interior and entry door systems for commercial and

residential use.

U.S. LBM Holdings, LLC

3/30/2016 Design and Direct Source

LLC

Building Products Design and Direct Source LLC provides floor and wall tiles, and stone

and wood products for commercial projects.

Materials Marketing

Limited

3/23/2016 Squaw Canyon Prospect

In Paradox Basin

Construction Materials Squaw Canyon Prospect In Paradox Basin comprises a limestone

producing field in Utah.

Virtus Oil and Gas Corp.

3/15/2016 Colorado Precast

Concrete, Inc.

Construction Materials Colorado Precast Concrete, Inc. manufactures precast concrete

products.

Oldcastle Precast, Inc.

3/7/2016 Lithko Contracting, Inc. Construction Materials Lithko Contracting, Inc. prov ides concrete construction serv ices in the

United States.

The Pritzker Organization

3/7/2016 Serv ice Experts LLC Building Products

Distribution

Serv ice Experts LLC sells, repairs, and installs heating, ventilation, and air

conditioning equipment for home and commercial applications in North

America.

EnerCare Solutions Inc.

3/7/2016 3i Supply Company Building Products

Distribution

3i Supply Company distributes industrial and commercial insulation

products.

Distribution International,

Inc.

2/29/2016 Greco Bros. Ready Mix

Concrete Co., Inc.

Construction Materials Greco Bros. manufactures and markets ready-mixed concrete. Ferrara Brothers Building

Materials Corp.

2/29/2016 Parkland Plastics, Inc. Building Products Parkland Plastics, Inc. manufactures polymer-based architectural

panels.

Patrick Industries Inc.

2/29/2016 Eurobloq Inc. Construction Materials Eurobloq Inc. manufactures concrete. Brampton Brick Ltd.

2/25/2016 Royal Group Window &

Door Profiles Business,

(nka: ENERGI Fenestration)

Building Products Comprises window and door profiles manufacturing activ ities. OpenGate Capital, LLC

2/24/2016 InterWrap, Inc. Building Products InterWrap, Inc. manufactures coated woven packaging products and

multi-layer laminated reinforced plastic substrates.

Owens Corning

2/23/2016 Boxley Materials

Company, Inc.

Construction Materials Boxley Materials Company, Inc. produces and supplies various crushed

limestone, granite, and sandstone to contractors and road builders.

Summit Materials, Inc.

2/23/2016 Super-Krete International,

Inc.

Construction Materials Super-Krete International, Inc. manufactures concrete repair products

and restoration materials used to repair, waterproof, restore, enhance,

and protect concrete installations worldwide.

Arizona Polymer Flooring,

Inc.

2/23/2016 Deceuninck North

America, LLC, Deck and

Rail Business

Building Products Deceuninck North America, LLC designs, manufactures, and distributes

decking and railing products.

The Tapco Group

2/18/2016 Noble Company Building Products Noble Company manufactures building products for applications in tile,

plumbing, heating and cooling, and fire sprinkler industries.

Federal Process

Corporation

2/16/2016 USA Fastener Group, Inc. Building Products USA Fastener Group, Inc. manufactures and markets fasteners, and

provides machining serv ices for various industries in the United States.

MW Industries, Inc.

2/12/2016 Opta Minerals Inc. Construction Materials Opta Minerals Inc. manufactures, recycles, and distributes industrial

minerals, silica-free abrasives, and specialty sands and other products

and serv ices in Canada and internationally.

Speyside Equity LLC

PAGE |

REPRESENTATIVE BUILDING PRODUCTS & MATERIALS TRANSACTIONS

20








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Georgia aggregates

assets of LaFarge SA

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by


has purchased

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a subsidiary of


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restructuring and

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Industries, LLC

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Specialty Distribution

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HARRIS WILLIAMS & CO.

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Harris Williams & Co. (www.harriswilliams.com and www.harriswilliams.de) 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.

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