Housing Starts Rebound In Q1 Of 2023
In February 2023, the single-family and multi-family housing markets resurged, as indicated by a rise in building permits and housing starts. The total housing starts surged by 9.8%, reaching 1.45 million units, surpassing expectations. Multi-family housing starts experienced a significant increase of 24.1%, the highest since the second quarter of 2022, and permits increased by 24.3%, contributing to the overall permit growth of 13.8%.1
Labor Costs To Rise Above Inflation In Many Major U.S. Cities
According to Skanska USA predictions, construction costs are expected to increase by 3-5% for many U.S. cities over the next six to twelve months. Labor costs in Orlando and Phoenix are expected to rise the most due to significant labor shortages in both cities. Major labor cost increases in Dallas, Seattle, and San Francisco are also expected. Contractors are advised to prepare for these ongoing cost increases by adjusting their budgets and schedules to meet their expected earnings forecasts.2
Construction Input Prices Continue To Rise
Construction and nonresidential input prices reportedly increased by 0.4% in February. Although specific input prices such as energy fell sharply, materials price inflation and supply chain issues persist, posing a risk of recession. Construction input prices remained 2.6% higher YoY and nonresidential input prices rose by 2.8%. Contractors outside public and industrial megaprojects may be threatened by high capital costs and tightening financial conditions for future projects.3
Construction Companies Cut Costs By Adopting Semi-Autonomous Machinery
Teleo, a robotics firm retrofitting heavy equipment to make it semi-autonomous, partnered with three construction firms in California, Florida, and Ontario to deploy remote-operated machinery. Teleo's semi-autonomous platform allows one worker to operate multiple heavy machinery units across different job sites via remote control, cutting labor and time spent on the project. Additionally, using autonomous equipment in construction can aid in addressing the industry's increasing labor scarcity.4
Largest Transactions Closed
- Duro-Last, Inc.
- Holcim Ltd
- Jackson Generation, LLC
- Gulf Energy USA, LLC
- Endura Products, Inc.
- Masonite Corporation
- Molekule, Inc.
- Molekule Group, Inc.
- PERC Water Corporation
- Consolidated Water Co. Ltd.
- Walker Brothers Machinery Moving, Inc.
- Omega Morgan, Inc.
- Arboles NC Incorporated
- The Oxford Group Investments, Ltd.
- Tradewinds Mechanical, LLC
- Sound Partners., LLC; Calico Group
- Carolina Comfort Heating & Air Conditioning Service, Inc.
- SEM Holdings, LLC
- Tuscano-Maher Roofing Inc.
- Tecta America Corporation
Other Financial Buyer Transactions Closed
- Solamerica Energy Holdings LLC
- AB CarVal Investors LP
- America's Best Carpet & Tile
- Great Range Capital, LLC
- C. I. Banker Wire And Iron Works, Inc.
- Lincolnshire Management, Inc.
- Island Pump & Tank Corp.
- Hidden Harbor Capital Partners, LLC
- TileBar LLC
- AEA Investors LP
- Advanced Fire Protection Systems, LLC
- The Riverside Company
- Klear Enterprises, Ltd
- Greensburg Investment Group, LLC
- Northpoint Roofing Systems LLC
- Halmos Capital Partners
- Sterling Site Access Solutions, LLC
- Blue Wolf Capital Partners LLC
- Ardurra Group, Inc.
- Littlejohn & Co., LLC
Other Strategic Buyer Transactions Closed
- Safemark Systems, L.P.
- ASSA ABLOY AB
- Final Draft CAD, LLC
- Haley Ward, Inc
- Pro Door Doctor, LLC
- A1 Garage Door Service LLC
- Kordt Engineering Group, LLC
- Read Jones Christoffersen Ltd.
- Wise Connect, Inc.
- GridSource Incorporated, LLC
- The Blueline Group, LLC
- Atwell, LLC
- CES Engineering, Inc.
- S.E. Minor & Company, Inc.
- Tendon Systems, LLC
- Commercial Metals Company
- DBI Construction Consultants, LLC
- Cor Partners Inc.
- L.D. Tebben Company, Inc.
- Patuxent Roofing & Contracting, Inc.
Source S&P Capital IQ as of 4/10/2023 and PCE Proprietary Data
This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only.
EBIT - Earnings Before Interest and Taxes