Industry Trends
Vulcan Materials Company to Acquire U.S. Concrete
The construction aggregate company has agreed to acquire U.S. Concrete, a supplier ofaggregate and ready-mixed concrete, for approximately $2.15 billion. This deal reinforces Vulcan’s California footprint and access to natural reserves, as well as its positionsin Texas, New York, and New Jersey. As the economy bounces back from the coronavirus, the construction of new projects will continue to be a priority.1
Lumber Prices Are Crashing Causing Accumulators to Sell
Lumber futures for July fell 41% to $1,009.90, while cash lumber prices fell $160 to $770 per thousand board feet of lumber. This represents a 49% drop from the all-time high on May 28 of $1,515. Before the decline, hoarding by builders, retailers, and others concerned with running out of supply due to low mortgage rates and federal stimulus packages kept prices high. Stockpilers and typical buyers are now selling their supplies, flooding the market. Analysts do not predict pre-pandemic lumber price ranges of $350-$500, as demands should weaken as the housing market and home remodeling project trends cool off.2 3
Commercial Construction Set to Comeback with Infrastructure Bill
Dodge Data anticipates a rebound in construction starts this year and next . Total construction starts in the U.S. are expected to increase 4% this year, from $778 billion to $810 billion. It anticipates at least $100 billion for roads, bridges, and road safety and another for $100 billion for affordable housing. With the recent agreement of a $1 trillion infrastructure bill, commercial construction and building products are expected to get a bump. However, the final numbers have yet to be sorted out in the deal, and it still needs to pass through congress. Speaker of the House, Nancy Pelosi, has stated that the current deal will not pass without broader infrastructure budget reconciliation further expanding the overall infrastructure budget.4 5
New Report Finds Construction Contractors Struggling to Find Workers, Building Materials
A new U.S. Chamber of Commerce Commercial Construction Index (CCI) finds that contractors are becoming more optimistic about the economic turnaround. In Q2, three indicators of the CCI, revenue expectations, confidence in new business opportunities and backlog level, all improved. The index score remains below pre-pandemic levels, and moderate to high-level skilled labor is still hard to find for contractors. American Builders and Contractors’ Construction Confidence Index rose slightly in May from April. The supply chain stress of the housing market boom may have contributed to the slight increase in confidence.6 7
Construction Input Prices Increase
In May, construction input prices increased by 4.6% over the previous month, while nonresidential construction input prices increased by 4.8%. Overall, construction input prices are 24.3% higher than a year ago, and nonresidential construction input prices are 23.9% higher. Chief Economist of the Associated Builders and Contractors determined that elevated construction input prices would not “end anytime soon” even though supply chains should stabilize.8
Existing Home Sales Drop for Fourth Month in a Row while Median Price Rises
While year-over-year home sales increased in May 2021 by 44.6%, overall existing-home sales decreased for a fourth consecutive month. Total existing-home sales dropped 0.9% from April to May. Despite these numbers, supply is expected to improve. The median existing-home price in May was up to $350,300, the 111-straight month of year-over-year growth. The lack of houses available due to the high demand and the subsequent price increase contributes the most to the overall drop in home sales.9
Largest Transactions Closed
- Target
- Buyer
- Value($mm)
- Aegion Corporation
- New Mountain Capital, LLC
- $1,247.45
- Gibbs & Cox, Inc.
- Leidos Holdings, Inc.
- $380.00
- StonePoint Materials, LLC
- Arcosa, Inc.
- $375.00
- Substantially All of the Assets and Operations of Design Space Modular Buildings, Inc.
- McGrath RentCorp
- $260.00
- Global Energy Generation, LLC
- Migdal Insurance and Financial Holdings, Ltd.
- $110.00
- Cali Bamboo, LLC
- Victoria plc
- $103.90
- Spartan Surfaces, Inc.
- Floor and Décor Outlets of America, Inc.
- $90.00
- Solar Division of Horne Brothers Construction, Inc.
- Blue Ridge Power, LLC
- $60.00
- Vintage Estate Homes, LLC
- Landsea Homes US Corporation
- $54.60
- Solcius, LLC
- Sunworks United, Inc.
- $51.75
Source S&P Capital IQ as of 7/7/2021 and PCE Proprietary Data
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Data Assumptions 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. Glossary EBIT - Earnings Before Interest and Taxes Sources:
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