BUILDING PRODUCTS & MATERIALS

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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 authorised 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.

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B

UILDING

P

RODUCTS AND

M

ATERIALS

G

ROUP

O

VERVIEW



WHAT WE’RE READING



ECONOMIC UPDATE



M&A MARKET TRENDS



PUBLIC MARKETS



PUBLIC COMPARABLES



M&A ACTIVITY

CONTACTS

Mike Hogan

Managing Director

[email protected]

+1 (804) 915-0104

Ryan Nelson

Managing Director

[email protected]

+1 (804) 915-0121

Trey Packard

Vice President

[email protected]

+1 (804) 887-6016

INTRODUCTION

Harris Williams & Co. is pleased to present our Building Products & Materials Industry

Update for April 2015. This report provides commentary and analysis on current

capital market trends and merger and acquisition dynamics within the global

building products and materials industry.

We hope you find this edition helpful and encourage you to contact us directly if

you would like to discuss our perspective on current industry trends and M&A

opportunities or our relevant industry experience.

OUR PRACTICE

Harris Williams & Co. is a leading advisor to the building products and materials

industry. Our significant experience covers a broad range of end markets,

industries, and business models.

Construction

Materials

Building

Products

Distribution &

Services

has been acquired by

a portfolio company of

a subsidiary of

Select Atlanta, Georgia aggregates assets of LaFarge SA have been acquired by has been acquired by

a division of



Aggregates



Asphalt



Aluminum



Bricks



Clay



Glass



Precast Concrete / Ready Mix



Steel



Stone



Acoustical



Cabinets &



Countertops



Carpet and Flooring



Gypsum / Wallboard



Electrical Fixtures



HVAC



Lumber



Plumbing Fixtures



Roofing



Siding



Tools and Hardware



Windows & Doors



Architectural and



Engineering



Installation and



Contracting



Lumber and



Hardware



Plumbing



Roofing and Siding



Site Development



Wallboard

Construction

Materials

Building Products

Distribution &

Services

a portfolio company of

a division of a portfolio company of

a subsidiary of

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W

HAT

W

E

’

RE

R

EADING

SAWLOG PRICES DECLINED IN MANY COUNTRIES IN 2014

BFS ANTES $1.63 BILLION FOR PROBUILD TO FORM DISTRIBUTION GIANT

AMERICA, HERE IS THE FUTURE OF YOUR HOUSING MARKET

HOLCIM-LAFARGE MERGER IS ON AGAIN

Forrest Industry Network

4/7/2015

Sawlog prices declined in many countries during 2014 and the GSPI price index in the 4Q/14 was at the lowest level in

two years, reports the Wood Resource Quarterly. For the third consecutive quarter, the GSPI price index fell in

the 4Q/2014 to the lowest level in two years, reports the Wood Resource Quarterly. The biggest price declines the past

year have occurred in Europe, Latin America and Oceania, while prices in North America have remained stable

thanks to healthy domestic demand for lumber.

Read the full article

here

.

Builder Online

4/13/2015

PROSALES chief editor Craig Webb has an early take on the Builders FirstSource (BFS) announcement that it will

acquire ProBuild in an all-cash deal worth $1.63 billion. The acquisition creates America's biggest pro-oriented building

material supplier, a $6.1 billion giant with operations from Florida to Alaska. Just as home building companies are

consolidating to capture scale and market diversification opportunities during the early innings of recovery, the

distribution channel is now streamlining itself to simplify the flow of building materials, products, and supplies to job

sites.

Read the full article

here

.

Business Insider

4/13/2015

Homebuilding activity is coming back to life. On Monday, as the spring selling season kicks in, RBC Capital Markets

upgraded its forecasts for housing starts through 2017. In a note to clients, RBC's Robert Wetenhall wrote: "We are

raising our forecast for housing starts in 2015, 2016 and 2017 to 1.1 MM (+10%), 1.2 MM (+9%) and 1.25 MM (+4%) ... This

is an obvious positive for the spring selling season and leads us to believe that our preferred names (DR Horton, Lennar

Corporation, and PulteGroup) among the public builders can potentially meet or beat consensus estimates driven by

strong demand and solid ASP growth."

Read the full article

here

.

Concrete Construction

3/23/2015

A proposed $44.27 billion merger between Switzerland-based Holcim Ltd. and France's Lafarge SA, is moving forward

again, after the two companies came to an agreement over some changes in the original terms over the stockholder

share exchange ratio and exactly who will lead the combined operation. According to the press release, Both parties

agreed on a new exchange ratio of 9 Holcim shares for 10 Lafarge shares. A new Chief Executive Officer for the

combined group, to be proposed by the Lafarge Board and accepted by the Holcim Board, will be appointed as

from the closing of the transaction.

Read the full article

here

.

SAND DEMAND SLIPS

Aggregates Research

4/13/2015

US sand mines, including 63 in Wisconsin and six in Minnesota, are projected to ship significantly less sand to oil drillers

in 2015, compared with last year, when companies like Fairmount Santrol, US Silica and Superior Silica Sands set

production records, industry sources say. "This whole ripple effect has taken hold and it is going to continue," said

Richard Shearer, CEO of Superior Silica Sands, a Texas-based company that operates sand mines in Wisconsin. "There

are peak cycles and trough cycles, and we have hit a trough."

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94

96

98

100

102

104

106

108

110 (1.0%)

(0.5%)

0.0%

0.5%

1.0%

1.5%

2.0%

Q3

2012

Q4

2013

Q1

2013

Q2

2013

Q3

2013

Q4

2014

Q1

2014

Q2

2014

Q3

2014

Q4

E

CONOMIC

U

PDATE

INDUSTRIAL PRODUCTION INDEX

GDP



Real GDP increased by 0.5% in the fourth

quarter

of

2014,

and

overall

GDP

increased 2.4% in 2014, compared to an

increase of 2.2% for 2013



The increase in 2014 reflected positive

contributions from PCE, nonresidential

fixed investment, exports, state and local

government spending, private inventory

investment,

and

residential

fixed

investment



Current dollar GDP increased 3.9%, or

$650.8 billion, in 2014, compared to an

increase of 3.7%, or $604.9 billion in 2013



The U.S. economy seems to be slowing

towards a medium-term trend, however, a

strong dollar, jobs, wages and sentiment

are expected to drive consumer spending



Industrial production increased 0.1% in

February after decreasing .3% in January



Manufacturing output fell for the third

straight month and decreased 0.2% in

February, while the mining index fell 2.5%



Utilities output jumped 7.3% due to the

demand for heating caused by especially

cold temperatures around the country



Capacity Utilization for the industrial sector

decreased to 78.9% in February, nearly 1.2%

below its long-run (1972-2014) average



Manufacturing production is forecast to

grow 3.5% in 2015, due to job gains and

investments in natural gas infrastructure, the

housing

supply

chain,

transportation

infrastructure, factory automation, medical

care expansion, and increasing confidence

Seasonally Adjusted

Sources: Bureau of Economic Analysis

Seasonally Adjusted

Sources: Board of Governors of the Federal Reserve System

(Change in billions of dollars)

(5)

E

CONOMIC

U

PDATE

PERSONAL CONSUMPTION EXPENDITURES

ECONOMIC SENTIMENT



In February, personal income increased

$58.6 billion, or 0.4%, while personal

consumption

expenditures

(PCE)

increased $11.8 billion, or 0.1%



PCE, personal interest payments, and

personal

current

transfer

payments

increased $14.2 billion in February, in

stark contrast to a decrease of $25.4

billion in January



Proprietors’ income

decreased

$7.0

billion in February, compared to a

decrease of $11.7 billion in January after

the holiday shopping season



The economic sentiment index measures

how consumers view prospects for their

own financial situation, how they view the

near-term general economy prospects,

and their long-term view of economic

prospects



The Leading Economic Index (LEI) for the

U.S. improved again in February, driven

mostly by positive contributions from

building permits and financial components



For the six months ending February 2015,

the leading economic index increased

2.4% (approximately a 5% annual rate),

slower than the growth of 3.7% during the

previous six months



The

largest

positive

contributors

for

February were the interest rate spread,

stock prices, building permits, the Leading

Credit

Index,

consumer

business

expectations, and manufacturers’ new

orders for consumer goods

Indexed to 2010

Sources: The Conference Board

(percentage change in 6-month rolling average)

(indexed to 2010)

Sources: The Federal Reserve Bank of St. Louis

0.00%

0.10%

0.20%

0.30%

0.40%

0.50%

0.60%

Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15

100

107

114

121

128

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E

CONOMIC

U

PDATE

CONSUMER CONFIDENCE INDEX (CCI)

KEY INTEREST RATES



The

Consumer

Confidence

Index

improved to 101.3 in March, up from 98.8

in February



The increase was driven by an improved

short-term outlook for both income

prospects and employment, although

consumers were less enthusiastic about

business conditions



Consumer confidence is currently 8.81%

higher than the year-end 2014 rate, and

30.71% higher than the year-end 2013

rate



The 30-year mortgage rate declined in

March 2015 to 3.77%, the lowest rate

since May 2013



The current mortgage rate is 57 basis

points lower than the rate in March 2014



It is still unclear when the Fed plans to

raise rates, but it is expected sometime

later this year through practices the Fed

refers to as “policy normalization”

0

20

40

60

80

100

120 Indexed to 1985

Sources: The Conference Board

Seasonally Adjusted

Sources: Federal Reserve Bank of St. Louis

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

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E

CONOMIC

U

PDATE

U.S. NON-RESIDENTIAL CONSTRUCTION

U.S. HOUSING STARTS



U.S. housing starts in February were at a

seasonally adjusted annual rate of

897,000, 17% below the January estimate

of 1,081,000, and 3% below the estimate

for February 2014



This decrease in housing starts was

attributable to major drop-offs in

multi-family homes, as well as single-multi-family

homes,

which

accounts

for

approximately two-thirds of the market



February’s drop in housing starts was the

largest decline since 2011, and primarily

due to plunging temperatures and

snowstorms across the country



Housing starts continue to rebound from

unprecedented lows reached in 2009,

yet remain ~30% below the 50-year

average of 1.5 million starts per year and

are still below the average cyclical low of

1.0 million



Single family homes are ~37% below the

historical average of 1.0 million, while

multi-family starts are just 16% below their

long-term average of 418,000



New residential construction is projected

to grow at a 22% CAGR from 2014 to 2018

Sources: Census Bureau; projections are derived from census of 11 reputable

sources

0

500 1,000

1,500

2,000

2,500

1960

1968

1976

1984

1992

2000

2008

2016P

Single Family

Multi Family

50-Year Average

Average Recesion Low

(units in 000’s)

2014 Housing Starts:

~30% below 50-year

average

Feb. 2015 Total: 897

M-o-M Δ: (17%)

Y-o-Y Δ: (3%)



Non-residential construction has lagged

in

recovery

compared

to

other

construction

markets,

and

is

still

significantly below historical peak levels



Non-residential construction decreased

from January to February by .1%, and

decreased by 1.9% from the same period

a year ago



Several sectors within non-residential

construction

that

continue

to

see

spending

increases

include

manufacturing,

amusement

and

recreation, office, and sewage and

waste disposal

-12.0% -8.0% -4.0% 0.0% 4.0% 8.0% 12.0% $450 $500 $550 $600 $650 $700 $750

Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Non-Residential Construction Non-Residential Construction M-o-M Change

($ in billions)

Seasonally Adjusted Annual Rate

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E

CONOMIC

U

PDATE

REPAIR AND REMODELING SPEND

U.S. REMODELING MARKET INDEX



Repair and remodeling spend reached

over $155 billion in 2014, and continues

to experience significant growth as

homeowners invest in their homes



Repair and remodeling spend is less

cyclical than new construction and

provides stability to the overall market



R&R spend dropped just 10% from 2007

to 2009 as consumers chose to invest in

repairs and remodels in lieu of making

substantial investment in new homes



Growth for 2014 – 2018 is projected at a

CAGR of 4.4%



In the fourth quarter of 2014, the

Remodeling Market Index (RMI) posted a

record-high result of 60, the seventh

consecutive quarter for an RMI over 50.



An RMI over 50 indicate that remodelers

are reporting higher activity than the

quarter.

The

overall

RMI

averages the indicators of current and

future remodeling activity.



All four subcomponents of the RMI future

index, bids, commitments for three

months, job backlog, and appointments

for proposals saw increases over the prior

period.

Sources: McGraw Hill

40

45

50

55

60

65 Q1

2012

Q3

2012

Q1

2013

Q3

2013

Q1

2014

Q3

2014

Index values greater than 50

indicate activity higher than

the previous quarter

Sources: National Association of Home Builders

$0

$50

$100

$150

$200

2002

2004

2006

2008

2010

2012

2014

2016P 2018P

($ in billions)

2014 – 2018 CAGR: 4.4%

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0 10 20 30 40 50 60 70 Q1 2010 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1

N

u

m

b

e

r

o

f

A

n

o

u

n

c

e

d

M

&

A

D

e

a

ls

M&A M

ARKET

T

RENDS

MARKET OBSERVATIONS

BUILDING PRODUCTS QUARTERLY M&A ACTIVITY



Global M&A deal volume in 2014 was $3.5 trillion, a 47% increase from 2013 levels and the strongest annual

period since 2007

−

Deal volume in the Americas increased 51% over 2013 totals, accruing $2.1 trillion in activity from 15,734

announced deals

−

European M&A activity increased 55% over 2013 levels, and Asia Pacific M&A accounted for the strongest

annual period in the region since 1908



North American building products deal activity in 2014 increased by approximately 20% from the prior year



Credit conditions remain issuer-friendly, and leveraged loan multiples remain robust, with average debt multiples

approximately 4.8x EBITDA for issuers through February 2015



Large corporations continue to drive M&A activity with bloated cash balances, soaring stock prices, and

relatively inexpensive credit

Note: Includes all building products, construction materials, or forest products, for M&A transactions announced in the U.S. or Canada Source: Capital IQ, S&P Leveraged Commentary & Data, Thomson Reuters, Bloomberg, Markit Economics, Investment News.

Total Transactions: 176 YOY Change: 35.4% Total Transactions: 202 YOY Change: 14.8% Total Transactions: 191 YOY Change: (5.4%) Total Transactions: 156 YOY Change: (18.3%) Total Transactions: 187 YOY Change: 19.9%

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S

ELECT

S

ECTOR

O

VERVIEWS

& T

RENDS

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

Industry Commentary:



Markets are local in nature due to high shipping costs



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

Marietta, Vulcan Materials and a large number of independent operators



Demand derived from total construction spending, which is based on

global, national, regional and local economic conditions. 25 billion tons of

aggregates are used per year globally, roughly four tons per person

U.S. Aggregates Consumption

(values in millions of metric tons)

Description



Paving and roofing materials include asphalt and tar-paving mixtures and

blocks, shingles, roofing cements, and coatings

Industry Commentary:



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



MAP 21 regulations extend and fund federal highway programs, including

over $120 billion for infrastructure programs



Industry planning for the next highway bill is underway and will develop

further in 2015



Simultaneously, resurgent U.S. housing activity supports asphalt shingle and

roofing cement demand

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.

Industry Commentary:



U.S. cement consumption has historically 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.



Significant barriers to entry exist for new cement capacity.



Transportation costs lead to regional markets.

U.S. Cement Consumption Outlook

(millions of metric tons)

Source: U.S. Geological Survey

Source: U.S. Energy Information Administration

Source: PCA, Eagle Materials, and IBIS

1,450 1,160 1,160 1,160 1,170 1,190 1,060 838 805 810 839 847

0

500 1,000

1,500

2,000

2,500

3,000

2008

2009

2010

2011

2012

2013

Stone

Sand/Gravel

4,000 8,000 12,000 16,000 20,000

0

20

40

60

80

100

120 2007

2009

2011

2013

2015P

Government

Residential

Non-residential

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S

ELECT

S

ECTOR

O

VERVIEWS

& T

RENDS

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



This year’s first-quarter lumber price slide was significant, Random Lengths

Framing Lumber Composite Price lost $47 due to poor weather and slower

than expected start to 2015



Dealers’ three-month sales expectations surged with warmer and drier

weather, Random Length surveys matched or exceeded record high levels

Framing Lumber Composite Price

Index

($ per thousand board feet)

Source: Random Lengths

Description



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

applications and metal elastomeric, and plastic roofing used in

non-residential applications

Industry Commentary:



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

has been more sheltered than other building products markets from the

housing slump due to the nondiscretionary need for roof repair and

replacement



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

U.S. housing stock will drive continued demand for replacement



Additionally, renewed strength in new housing construction and a generally

stronger economic climate will support growth

Source: Freedonia

Roofing Demand by Primary Segment

Description



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

doors for residential and non-residential markets

Industry Commentary:



Window and door demand is primarily driven by new commercial and

residential construction as well as repair and remodel spending



Annual home improvement spending is expected to decelerate from 6.3% in

the first quarter of 2015 to 1.6% by the third quarter due in part to a

moderating house price gains



As first-time buyers begin to return to the market home improvement and

housing starts should make a strong push back towards long-term levels

Leading Indicator of Remolding

Activity ($ in billions)

Source: The Joint Center for Housing Studies of Harvard University

$100 $150 $200 $250 $300 $350 $400 $450 $500

Residential

Reroofing

49.4%

Nonresidential

Reroofing

34.5%

New Residential

9.1%

New

Nonresidential

7.0%

$80

$90

$100

$110

$120

$130

$140

$150

Q1'11 Q1'12 Q1'13 Q1'14 Q1'15E

(12)

S

ELECT

S

ECTOR

O

VERVIEWS

& T

RENDS

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

Industry Commentary:



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 are at historically low levels and as demand for new

homes grows, builders will respond by increasing their stock

U.S. Wallboard Demand

(billions of square feet)

Source: National Gypsum Forecast and Gypsum Association

Description



Residential, commercial, and industrial heating, ventilation, air-conditioning,

and refrigeration equipment

Industry Commentary:



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

Number of World-Wide A/C Units

(millions of units)

Source: BSRIA Market Intelligence

Description



Plumbing fixtures, bathtub and shower fixtures, and indoor pipes constitute

this segment

Industry Commentary:



Primary demand determinants are repair and remodel spending, new home

construction, and nonresidential improvement and repair



Domestic manufacturers are facing strong headwinds from cheap imports

which have increased from 69.9% of the market in 2008 to an estimated

78.4% in 2013



Increased demand in this segment will be driven by increased repair and

remodel spending

Residential Remodeling Index (RRI)

Source: Remodeling Magazine – RRI Points to Speedup in Remodeling

Activity March 2015

0

20

40

60

80

100

120

140

160

180 2012 2013 2014E 2015P 2016P 2017P

0

25

50

75

100

125 Annual

Q1

Q2

Q3

Q4

2006 2008 2010 2012 2014

0

5

10

15

20

25

30

35

40 1990

1996

2002

2008

2014

(13)

(60%)

(40%)

(20%)

0%

20%

40%

60%

80%

100%

120%

140%

Apr-10

Oct-10

Apr-11

Oct-11

Apr-12

Oct-12

Apr-13

Oct-13

Apr-14

Oct-14

Apr-15

Building Materials Index

Building Products Index

Building Products Distributors Index

S&P 500 Index

P

UBLIC

M

ARKETS

MEDIAN TEV / 2015 EBITDA

MEDIAN REVENUE GROWTH (2014 – 2015P)

MEDIAN EBITDA MARGIN (2013 – 2015P)

MEDIAN EBITDA GROWTH (2014E-2015P)

MEDIAN CAPEX / REVENUE (2015E)

MEDIAN REVENUE GROWTH (2011 – 2014)

HISTORICAL STOCK PRICES (MARCH 16

TH

_{, 2010 - MARCH 16}

TH

_{, 2015)}

11.0x

10.5x

10.2x

Building Products Distributors Building Products Building Materials

8.5%

8.7%

7.3%

5.4%

6.4%

5.7%

4.3%

12.8%

16.7%

10.2%

16.7%

12.0%

0.9%

2.9%

6.3%

(14)

As of April 14, 2015 ($ in Millions, except per share amounts)

P

UBLIC

C

OMPARABLES

BUILDING MATERIALS

Stock Performance

Current % of 2014 TEV / EBITDA

Price LTM High Mkt Cap TEV Revenue EBITDA Margin 2015 2016 Aggregates and Cement

Holcim Ltd. $76.37 90.1% $24,885 $37,469 $19,238 $3,755 19.5% 9.3x 8.3x

CRH plc $26.35 96.6% 21,507 24,316 22,892 1,972 8.6% 10.9x 9.2x

Lafarge S.A. $66.86 92.7% 19,242 31,224 15,546 3,139 20.2% 9.7x 8.6x

HeidelbergCement AG $80.48 99.1% 15,124 23,705 15,281 2,472 16.2% 8.7x 8.0x

CEMEX, S.A.B. de C.V. $0.98 83.9% 12,258 28,766 14,228 2,482 17.4% 9.7x 8.4x

Vulcan Materials Company $83.33 96.6% 10,979 12,844 2,994 575 19.2% 15.6x 12.3x

Martin Marietta Materials Inc. $138.11 94.5% 9,207 10,686 2,679 588 22.0% 12.3x 10.4x

Eagle Materials Inc. $85.05 80.5% 4,235 4,739 1,032 284 27.5% 10.4x 8.5x

Summit Materials, Inc. $21.06 94.3% 490 1,761 1,204 173 14.4% 9.0x 7.5x

Median 94.3% 19.2% 9.7x 8.5x

Mean 92.0% 18.3% 10.6x 9.0x

Heavy Construction Materials

CRH plc $26.35 96.6% $21,507 $24,316 $22,892 $1,972 8.6% 10.9x 9.2x

James Hardie Industries plc $12.12 99.5% 5,401 5,710 1,622 348 21.5% 13.9x 11.5x

Boral Limited $5.06 98.9% 3,960 4,641 3,643 335 9.2% 10.2x 9.1x

Headwaters Incorporated $18.66 100.0% 1,353 1,814 825 134 16.2% 11.0x 9.8x

U.S. Concrete, Inc. $33.41 93.5% 472 663 704 70 9.9% 7.6x 6.3x

Median 98.9% 20.0% 10.9x 7.7x

Mean 97.7% 13.1% 10.7x 9.2x

Lumber and Wood Products

Weyerhaeuser Co. $32.21 87.0% $16,682 $20,518 7,693 $1,722 22.4% 11.3x 10.1x

West Fraser Timber Co. Ltd. $48.75 78.1% 4,055 4,402 3,330 497 14.9% 7.4x 5.9x

Canfor Corp. $19.26 75.9% 2,584 2,893 2,891 442 15.3% 6.1x 4.6x

Louisiana-Pacific Corp. $16.14 90.9% 2,289 2,518 1,935 16 0.8% 22.8x 8.7x

Boise Cascade Company $37.15 84.6% 1,471 1,609 3,574 196 5.5% 7.4x 6.3x

Norbord, Inc. $19.94 83.2% 1,079 1,455 1,198 89 7.4% 10.6x 4.3x

Universal Forest Products Inc. $53.13 94.5% 1,061 1,160 2,660 130 4.9% 7.5x 6.9x

Median 84.6% 7.4% 7.5x 6.3x

Mean 84.9% 14.7% 8.6x 6.7x

Overall Median 93.5% 15.3% 10.2x 8.5x

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P

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BUILDING PRODUCTS

Price LTM High Mkt Cap TEV Revenue EBITDA Margin 2015 2016

ASSA ABLOY AB $62.38 99.9% $23,095 $25,277 $7,265 $1,312 18.1% 17.8x 16.5x

Mohawk Industries Inc. $183.86 97.6% 13,438 15,599 7,803 1,161 14.9% 11.4x 10.1x

Masco Corporation $26.57 97.0% 9,262 11,201 8,521 1,003 11.8% 10.0x 9.2x

Fortune Brands Home & Security, Inc. $46.14 95.8% 7,346 7,828 4,014 498 12.4% 12.7x 10.8x Lennox International, Inc. $111.20 98.4% 5,003 5,891 3,367 387 11.5% 12.9x 11.4x

Owens Corning $42.83 97.5% 5,065 7,058 5,276 717 13.6% 9.2x 8.2x

USG Corporation $26.28 79.9% 3,821 5,707 3,724 454 12.2% 9.8x 8.3x

Kingspan Group plc $19.80 98.4% 3,486 3,656 2,289 229 10.0% 14.1x 12.3x

Armstrong World Industries, Inc. $56.38 94.1% 3,108 3,977 2,515 313 12.5% 10.6x 9.3x Masonite International Corporation $69.69 99.7% 2,098 2,444 1,838 117 6.3% 13.3x 10.4x

Trex Co. Inc. $54.20 93.9% 1,739 1,729 392 84 21.4% 16.4x 13.4x

Nortek Inc. $87.75 95.1% 1,427 2,715 2,546 242 9.5% 8.5x 7.9x

Interface Inc. $20.89 97.7% 1,387 1,596 1,004 113 11.3% 11.2x 10.0x

NCI Building Systems Inc. $16.71 77.1% 1,233 1,667 1,383 69 5.0% 12.0x 9.5x

Continental Building Products, Inc. $22.87 96.6% 1,009 1,343 425 115 27.0% 9.6x 8.1x

American Woodmark Corp. $53.47 94.7% 850 710 807 57 7.0% 9.2x NA

Tyman plc $4.61 92.1% 774 905 547 84 15.4% 9.7x 8.8x

Ply Gem Holdings, Inc $13.05 88.8% 886 1,846 1,567 119 7.6% 10.5x 7.9x

Quanex Building Products Corporation $19.14 87.8% 643 580 597 45 7.5% 9.5x 7.9x

PGT, Inc. $11.09 97.5% 529 680 306 44 14.2% 9.8x 8.0x

Norcraft Companies, Inc. $25.73 98.9% 445 545 370 51 13.8% 8.8x 7.5x

Overall Mean 94.2% 12.5% 11.3x 9.8x

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DISTRIBUTORS

Price LTM High Mkt Cap TEV Revenue EBITDA Margin 2015 2016

Wolseley plc $60.11 96.8% $15,633 $17,476 $20,129 $1,377 6.8% 11.5x 10.3x

Beacon Roofing Supply, Inc. $31.87 84.0% 1,577 1,803 2,371 126 5.3% 11.0x 9.3x

Richelieu Hardware Ltd. $50.36 97.7% 986 981 567 67 11.9% 14.2x 13.0x

Builders FirstSource, Inc. $6.90 78.8% 678 1,044 1,604 61 3.8% 11.9x 9.0x

Stock Building Supply Holdings, Inc. $17.89 85.3% 468 560 1,296 32 2.5% 10.6x 7.6x

Hardwoods Distribution Inc. $10.37 93.1% 173 204 389 22 5.7% 8.5x 7.7x

CanWel Building Materials Group Ltd. $4.66 89.5% 134 239 656 25 3.8% 9.8x 9.1x

Bluelinx Holdings Inc. $1.09 74.1% 97 526 1,979 23 1.2% NA NA

Overall Mean 87.4% 5.1% 11.1x 9.4x

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M&A T

RANSACTIONS

Date Target Vertical Business Description Acquirer

4/7/2015 Northland Construction Supplies Ltd.

Distribtion Northland Construction Supplies Ltd. supplies goods to concrete construction, ceramic, and masonry industries.

National Concrete Accessories 4/2/2015 Ferrara Brothers Building

Materials Corp.

Building Materials Ferrara Brothers Building Materials Corp. manufactures concrete. U.S. Concrete, Inc.

3/31/2015 Design Specialties, Inc. Building Products Design Specialties, Inc. manufactures glass fireplace doors. Blackthorne Partners LTD.

3/30/2015 Norcraft Companies, Inc. Building Products Norcraft Companies, Inc. manufactures kitchen and bathroom cabinetry in the United States and Canada.

Fortune Brands Home & Security, Inc.

3/30/2015 AFC Industries, Inc. Distribtion AFC Industries, Inc. engages in the purchase, distribution, assembly, and packaging of fasteners and related hardware products.

Incline Equity Partners; Incline Equity Partners III, L.P.

3/27/2015 PrimeSource Building Products, Inc.

Distribtion PrimeSource Building Products, Inc. distributes fasteners and building materials.

Platinum Equity, LLC

3/26/2015 Martin Fireproofing Corporation

Building Products Martin Fireproofing Corporation manufactures, sells, and installs specialty roof deck solutions.

Innovative Metals Company, Inc. 3/25/2015 Pinnacle Stone & Tile LLC Building Products Pinnacle Stone & Tile LLC manufactures and installs countertops, shower

and bath surrounds, fireplaces, vanities, floor inlays, and custom projects in Northern California.

L.A.R.K. Industries, Inc.

3/25/2015 J & B Materials, Inc. Building Materials J & B Materials, Inc. is a supplier of drywall, metal studs, plaster, pool, and general building materials.

Gypsum Management and Supply, Inc.

3/19/2015 Pipeline Supply, Inc. Distribtion Pipeline Supply, Inc. operates as a wholesale distributor of plumbing, HVAC, hydronics, radiant floor heating, sewer, water, and well supplies.

Dakota Supply Group, Inc.

3/17/2015 Thermoseal Industries, LLC Building Materials Thermoseal Industries, LLC develops, produces, and sells insulating glass units to the commercial refrigeration, oven, test laboratory, and architectural markets.

Senneca Holdings

3/12/2015 Fry Reglet Corporation, Axiom & Serpentina Ceiling Systems

Building Products Axiom & Serpentina Ceiling Systems of Fry Reglet Corporation, a ceiling systems manufacturer, was acquired by Worthington Armstrong Venture.

Worthington Armstrong Venture

3/9/2015 Easi-Serv Products Inc. Building Products Easi-Serv Products Inc. designs and manufactures drive-thru windows, food conveyors, and glass patios.

Franke Foodservice Systems, Inc. 3/7/2015 Mechoshade Systems, Inc. Building Products Mechoshade Systems, Inc. provides manual, motorized, and automated

solar-shading and room-darkening solutions.

Springs Window Fashions LLC

3/7/2015 Mechoshade Systems, Inc. Building Products Mechoshade Systems, Inc. provides manual, motorized, and automated solar-shading and room-darkening solutions.

Springs Window Fashions LLC

3/2/2015 Lampert Yards, Inc. Distribution Lamperts is a leading building material distributor providing windows, doors, roofing, siding, insulation, millwork, cabinets, and framing materials to professional builders and consumers in their local markets.

US LBM Holdings, LLC

3/2/2015 BMI Products of Northern California Inc.

Building Materials BMI Products of Northern California Inc. manufactures silo systems for construction needs.

Sika AG

2/26/2015 Zero International, Inc. Building Products Zero International, Inc. designs and manufactures a range of specialized sealing systems for doors and windows.

Schlage Lock Company LLC

2/26/2015 Atis Group Inc. Building Products Atis Group Inc. manufactures and distributes doors and windows and high performance energy-efficient products for the construction and home improvement markets.

Desjardins Business Capital régional et coopératif 2/25/2015 J. A. Jack & Sons, Inc. Building Materials J. A. Jack & Sons, Inc. mines and processes limestone. Harrison Gypsum, LLC

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M&A T

RANSACTIONS

2/24/2015 Right Away Redy Mix, Inc. Building Materials Right Away Redy Mix, Inc. provides ready-mix, aggregate, and concrete pumping products and services.

U.S. Concrete, Inc.

2/18/2015 Maryland Materials, Inc. Building Materials Maryland Materials, Inc. engages in mining and producing granite and traprock products.

Bluegrass Materials Company, LLC 1/29/2015 Preferred Sands of

Canada, ULC, Assets of Hanson Lake Facility

Building Materials Preferred Proppants, LLC, Assets of Hanson Lake Facility comprises silica sand mining assets.

Hilco Industrial, LLC; Gordon Brothers Group, LLC, Investment Arm 1/29/2015 B&L Wholesale Supply Building Materials B&L Wholesale Supply is a Northeastern distributor of roofing and related

residential and commercial building products, supplies, and services

SRS Distribution

1/7/2015 Wameling Drywall Corp. Distribution Wameling Drywall Corp., doing business as Gilbert Supply Company, supplies building products.

American Builders & Contractors Supply Co., Inc.

12/29/2014 AGC Flat Glass North America, Inc.

Building Materials AGC Flat Glass North America, Inc. fabricates Commercial Glass in the United States.

Trulite Glass Company, LLC

12/23/2014 PFB Corp. Building Products PFB Corporation is engaged in manufacturing and marketing insulating building products primarily for the residential and commercial construction projects in North America.

Aeonian Capital Corporation 12/23/2014 Empire Truss Ltd. Building Products Empire Truss Ltd. manufactures custom design roof trusses and floor

trusses, and distributes engineered wood products.

Builders FirstSource, Inc.

12/15/2014 Lumber Specialties, Ltd. Distribution Lumber Specialties, Ltd. manufactures and distributes structural building components for customers in the United States.

12/15/2014 Distribution International, Inc.

Distribution Distribution International, Inc. distributes thermal and acoustical insulation and related supplies for maintenance and repair operations worldwide.

Advent International Corporation 12/11/2014 Diamond Concrete, Inc. Building Materials Diamond Concrete, Inc. manufactures and distributes concrete. U.S. Concrete, Inc.

12/9/2014 Standard Roofings, Inc. Distribution Standard Roofings, Inc., doing business as The Standard Group, distributes exterior building products to builders, contractors, architects, and homeowners.

American Builders & Contractors Supply Co., Inc.

12/8/2014 Scofield Construction Services, LLC

Building Materials Scofield Construction Services, LLC, through its subsidiaries, produces ready-mix concrete.

Redi-Mix, L.P.

12/8/2014 American Masons' & Building Supply Co.

Distribution American Masons' & Building Supply Co. supplies building materials in the Greater Hartford area.

12/2/2014 HD Supply Distribution Services, LLC

Distribution HD Supply Distribution Services, LLC distributes select building products to national and regional hardware retailers, and the professional market in North America.

The Home Depot, Inc.

12/1/2014 Handcrafted Homes, LLC Building Products Handcrafted Homes, LLC produces modular homes in the United States. Innovative Building Systems LLC

11/25/2014 Wallboard Supply Company, Inc.

Distribution Wallboard Supply Company, Inc. distributes and installs building materials to commercial and residential construction industries in New England.

11/19/2014 Atlas Homewares, Inc. Building Products Atlas Homewares, Inc. designs decorative hardware products. Top Knobs, Inc.

11/19/2014 Airxcel, Inc. Building Products Airxcel, Inc. designs and manufactures air conditioning, heating, ventilating, and related appliances.

Yukon Partners; One Rock Capital Partners, LLC 11/19/2014 Acanthus Industries Inc. Building Products Acanthus Industries Inc. designs and manufactures architectural wood

products in Canada.

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M&A T

RANSACTIONS

11/19/2014 Acanthus Industries Inc. Building Products Acanthus Industries Inc. designs and manufactures architectural wood products in Canada.

Art for Everyday, Inc.

11/19/2014 Texas Tempered Glass, Inc. Building Materials Texas Tempered Glass, Inc. is a glass fabricator serving commercial and residential end markets in the United States and abroad.

Trulite Glass & Aluminum Solutions, LLC

11/18/2014 Architectural Elements LLC Building Products Architectural Elements LLC manufactures and distributes doors, windows, and hardware for residential and commercial construction in the United States.

FP2D, LLC

11/18/2014 Brooklyn Navy Yard Modular-Construction Facility

Building Products Brooklyn Navy Yard Modular-Construction Facility comprises a construction facility that constructs residential units.

Forest City Ratner Companies, LLC 11/14/2014 Alcoa Heating & Cooling Building Products Alcoa Heating & Cooling provides installation and service support for

HVAC systems, tankless gas water heaters, and home generators.

MK Russell & Abbott

11/13/2014 Peachtree Communities Group, Inc.

Building Products Peachtree Communities, Inc. builds homes/residences in Atlanta. Century Communities, Inc.

11/11/2014 Vicwest Inc Building Products Vicwest Inc. manufactures and distributes building construction products and steel containment products North America and internationally.

Kingspan Group plc

11/11/2014 Southern Fastening Systems, Inc.

Distribution Southern Fastening Systems, Inc. distributes tools and fasteners for wood construction projects and manufacturing operations.

Carlson Systems, LLC

11/10/2014 Industrial Noise Control, Inc.

Building Products Industrial Noise Control, Inc. manufactures and distributes industrial noise control products and systems for applications in industrial, commercial, architectural, and environmental markets.

United Process, Inc.

11/10/2014 CENTRIA Incorporated Building Materials CENTRIA Incorporated designs, develops, and manufactures engineered wall, roof, and floor systems, as well as provides coil coating services.

Steelbuilding.com, Inc.; NCI Group, Inc.

11/8/2014 Trussbilt LLC Building Products Trussbilt LLC. designs and manufactures security products. Coastal Plain Ventures, LLC

11/7/2014 Henkens Equipment, Inc. Building Products Henkens Equipment, Inc. is engaged in the sale of agricultural and construction equipment.

Butler Ag Equipment

11/5/2014 Connor Sport Court International, Inc.

Building Products Connor Sport Court International, Inc. designs and builds sports surfacing and flooring products.

Gerflor USA, Inc.

11/4/2014 Hanson Structural Precast, Inc.

Building Materials Hanson Structural Precast, Inc. manufactures and supplies structural and architectural precast components.

Wells Concrete Products, Inc.

11/3/2014 Watertown Plumbing And Heating Supply Co., Inc.

Distribution Watertown Supply, a Division of F.W. Webb Company is a wholesale distributor specializing in piping, plumbing, and heating repair parts for commercial/industrial/institutional facilities maintenance.

F.W. Webb Company

10/31/2014 Damron Sand & Gravel, Inc.

Building Materials Damron Sand & Gravel, Inc. manufactures and supplies sand and gravel in Lubbock, Texas.

PB Materials Holdings, Inc.

10/27/2014 TMI, LLC Building Products TMI, LLC extrudes and manufactures flexible polyvinyl chloride (PVC) and energy control doors.

River Associates Investments, LLC 10/23/2014 Peterson Industries, Inc. Building Products Peterson Industries, Inc. manufactures and distributes tub enclosures,

shower enclosures and doors, mirror closet doors, and sliding glass patio doors.

Aldora Aluminum and Glass Products Inc.

10/21/2014 Tarragon Homes LLC Building Products Tarragon Homes LLC provides homebuilding services. AVEW Holdings Inc.

10/21/2014 New York Sand & Stone, LLC

Building Materials Distributor

New York Sand & Stone, LLC supplies construction materials in the New York City market.

Eastern Concrete Materials, Inc.

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R

EPRESENTATIVE

B

UILDING

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T

RANSACTIONS

has been acquired by a portfolio company of

has been acquired by a portfolio company of has been acquired by

a portfolio company of

a division of

has been acquired by a division of

has been acquired by has been acquired by

has been acquired by a division of a division of

has been acquired by and a portfolio

company of

a subsidiary of

has been acquired by A Private Investor Group has completed a recapitalization with a portfolio company of

has been acquired by a subsidiary of

Select Atlanta, Georgia aggregates assets of LaFarge SA have been acquired

by

a portfolio company of has been acquired by

have been acquired by The Wichita, Kansas aggregates, concrete,

asphalt, and paving assets of LaFarge SA

a division of has been acquired by has been acquired by

Strategic Industries, LLC

Private Investors

has purchased certain assets of

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BUILDING PRODUCTS & MATERIALS

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ATERIALS

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VERVIEW

CONTENTS



WHAT WE’RE READING



ECONOMIC UPDATE



M&A MARKET TRENDS



PUBLIC MARKETS



PUBLIC COMPARABLES



M&A ACTIVITY

CONTACTS

Mike Hogan

Managing Director

[email protected]

+1 (804) 915-0104

Ryan Nelson

Managing Director

[email protected]

+1 (804) 915-0121

Trey Packard

Vice President

[email protected]

+1 (804) 887-6016

INTRODUCTION

Harris Williams & Co. is pleased to present our Building Products & Materials Industry

Update for April 2015. This report provides commentary and analysis on current

capital market trends and merger and acquisition dynamics within the global

building products and materials industry.

We hope you find this edition helpful and encourage you to contact us directly if

you would like to discuss our perspective on current industry trends and M&A

opportunities or our relevant industry experience.

OUR PRACTICE

Harris Williams & Co. is a leading advisor to the building products and materials

industry. Our significant experience covers a broad range of end markets,

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Construction

Materials

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Services

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