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Mike Rosendahl

E: mrosendahl@pcecompanies.com

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Industry Trends

Continuously Rising Steel Prices Cause Duress for Manufacturers

The CRU Group's Midwest steel index projected prices at $1,940 per ton of steel in early September, up nearly $600 from 2019 and 2020. The current tariffs on imported steel, implemented by the Trump administration, are exacerbating the price hike. China makes more than half of the world’s steel but is cutting back due to carbon emissions. Consequently, there is an opportunity for U.S.-based manufacturers to increase production once the supply chain issues are resolved.1

Aluminum Prices Soar to Record Highs

According to data provided by S&P Global Platts, U.S. Midwest delivered aluminum is at an all-time high of 34.75 cents a pound, which is up more than 136% from the beginning of this year. Due to import tariffs and COVID-related supply chain issues, U.S. aluminum manufacturers have about six months left of aluminum supply compared with the typical eight to ten months on hand.2

Supply Chain Issues Hinder U.S. Building Product Sales

Fitch Rating revised its 2021 U.S. GDP forecast to 6.2% from 6.8% and increased its inflation forecast from 4.1% to 4.4% on September 17, 2021. Constraints in the supply chain, such as labor shortages and raw material price hikes, are driving the cost of processed inputs for U.S. firms to the highest level in 40 years, with the majority of these increases being passed on to consumers. Additionally, construction materials increased more than 10% YoY since March and climbed 19% in August alone, both of which indicate the severity of this issue. Fitch does not expect the supply chain to stabilize until at least 2022, but that forecast depends mainly on stabilizing input prices.3

Lumber Prices Make a Comeback

The recent rise in lumber prices is part of a broad rally in commodities and indicates that supply chain disruption is still applying pressure on markets. Current prices are hovering around $632.1 per thousand board feet, down from May’s high of $1,670.50. Analysts indicate that prices will need to increase to reach equilibrium with current demand. The current and expected price levels will pose a serious concern to builders and consumers alike. The 2015-2019 futures contracts indicate that the expected price level was around $357, 44% lower than current prices. Producers are reacting by increasing investment in lumber processing facilities and expect production to increase by nearly 18%.4

New Construction Rebounding

New construction projects have rebounded from the depths of the COVID-19 related economic recession. Recent Census and real estate data indicate that housing permits are up 6% in August over the July rate of 1,630,000 and 13.5% higher than August 2020.5

Largest Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • U.S. Concrete, Inc.
  • Vulcan Materials Company
  • $2,151.74
  • Henry Company, LLC
  • Carlisle Companies Incorporated
  • $1,575.00
  • Insulated Metal Panels Business of Cornerstone Building Brands, Inc.
  • Vulcraft Canada, Inc; Nucor Insulated Panel Group, Inc.
  • $1,000.00
  • Riggs Distler & Company, Inc.
  • Centuri Group, Inc.
  • $855.00
  • The New Home Company, Inc.
  • Apollo Management IX LP
  • $454.58
  • North American Architectural Glass Business of AGC, Inc.
  • Cardinal Glass Industries, Inc.
  • $450.00
  • CastleRock Communities LP
  • Daiwa House USA Inc.
  • $402.00
  • Cornerstone Building Alliance SW, LLC
  • Builders FirstSource, Inc.
  • $400.00
  • Advanced Drainage Systems, Inc.
  • Canada Pension Plan Investment Board
  • $350.00
  • LASCO Fittings, Inc.
  • North American Pipe Corporation
  • $252.50
  • Cascade Windows, Inc.
  • Cornerstone Building Brands, Inc.
  • $245.00

Other Financial Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Vue at the Quarter
  • Exeter Property Group, LLC
  • $79.67
  • Surveying And Mapping, LLC
  • Peak Rock Capital LLC
  • n/a
  • Exterior Solutions of Georgia, Inc.
  • Soundcore Capital Partners, LLC
  • n/a
  • Tecta America Corporation
  • Leonard Green & Partners, L.P.
  • n/a

Other Strategic Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Novo Building Products, LLC
  • Hardwoods Specialty Products US LP
  • $302.00
  • California TrusFrame LLC
  • Builders FirstSource, Inc.
  • $179.50
  • Doors & Building Components Inc.
  • Janus International Group, Inc.
  • $168.00
  • The Business and Certain Assets and Liabilities of The Commodore Corporation
  • Cavco Industries, Inc.
  • $153.00
  • Southwest Rock Products, L.L.C/Midwest Land Trust, LLC/White Mountain Properties, LLC
  • Arcosa MS5, LLC
  • $150.00
  • Southern Crushed Concrete, LLC
  • Martin Marietta Materials, Inc.
  • $140.00

 

Source S&P Capital IQ as of 10/8/2021 and PCE Proprietary Data

PCE Transactions

Contacts

Michael Poole

Orlando Office

407-621-2112 |

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Michael Rosendahl

New York Office

201-444-6280 Ext 1 |

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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
EBITDA - Earnings Before Interest, Taxes, Depreciation, Amortization
LTM - Last Twelve Months
TEV - Total Enterprise Value

Sources:

  1. “High Steel Prices Have Manufacturers Scrounging for Supplies,” Hufford, Austen, The Wall Street Journal, September 15, 2021.
  2. “Why Some Benchmark Aluminum Prices Have Soared to a Record,” Saefong, Myra, MarketWatch.
  3. “Ongoing Supply-Chain Issues to Constrain US Building Product Sales,” Fitch Wire, September 17, 2021.
  4. “Lumber Prices Stage a Late Season Rally,” Dezember, Ryan, The Wall Street Journal, October 1, 2021.
  5. “Monthly New Residential Construction, August 2021,” U.S. Census Bureau, September 21, 2021.
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