Building Products & Construction Q3 2022

Industry Trends

Construction Labor Market Continues to Loosen

In August, the construction sector added 16,000 jobs, contributing to the industry's year-over-year total of 311,000 jobs. Of these additional jobs, 10,900 can be attributed to residential construction, mainly residential specialty trade contractors. Wage growth in the sector continues to grow slowly, while unemployment numbers have expanded to 3.9% over the last 12 months.¹

Lumber Prices at 2-Year Low

The pandemic-related boom and supply chain crunch of lumber resulted in the highest lumber prices in recent years. As these pressures subside, the price of lumber is now lower than it was pre-pandemic at $422 per TBF in October 2022, relative to the $600 per TBF seen in October 2020. Random Lengths’ framing-lumber composite index is down 60% relative to March 2022.^{2 3}

Home Building Market Slows Down

Residential construction is down 13% from the highest activity level in more than a decade in April 2022. Since March, building permits for home construction have steadily declined, dropping 10% to 1.5 million units in August 2022. Builder confidence, measured by the National Association of Home Builders, has fallen seven straight months to a level not seen since the pandemic lockdown and 2008 housing crash.^{4 5 6}

Non-residential Construction Planning Up Over the Year

The Dodge Momentum Index dipped 1.2% in August 2022, dragged down by a 5.2% decline in institutional construction. However, the index is up by 14% compared to August 2021. This positive jump was driven by the commercial component, 16% higher, and the institutional segment, up 10%. The index reached a 14-year high in July 2022, falling marginally in August. This is still a positive indicator for non-residential construction going forward.⁷

Largest Transactions Closed

Target
Buyer
Value($mm)

Cornerstone Building Brands, Inc.
Clayton, Dubilier & Rice, LLC; CD&R Investment Associates X, Ltd.
$5,026.69
Elkay Manufacturing Company, Inc.
Zurn Elkay Water Solutions Corporation
$1,537.16
Stanley Access Technologies, LLC/Automatic Entrance Solutions Assets from Stanley Black & Decker
Allegion US Holding Company Inc.
$900.00
PLH Group, Inc.
Primoris Services Corporation
$470.00
Ravenvolt, Inc.
ABM Industries Incorporated
$450.00
SP Silica of Monahans, LLC/SP Silica Sales, LLC
ProFrac Holdings II, LLC
$90.00
Quality Aluminum Products, Inc.
Gibraltar Industries, Inc.
$54.00
Operating Assets of Vanhooseco Precast, LLC
CXT, Inc.
$50.50
Coastal Carolina Pumping, Inc.
Concrete Pumping Holdings, Inc.
$31.00
HomCo Lumber & Hardware
Builders FirstSource, Inc.
$30.50

Other Financial Buyer Transactions Closed

Target
Buyer
Value($mm)

Matthews Sand and Gravel/Edge Aggregates, LLC
Blue Ridge Construction Capital LLC
n/a
The Hiller Companies, Inc.
Littlejohn & Co., LLC
n/a
Fiber Production Business Reinforced Glass of OCV Chambéry
Blantyre Capital Limited
n/a
Alliance Plumbing Service & Repair, Inc.
Caprice Capital Partners, LLC; Shadow Lake Partners
n/a
Thorpe Specialty Services Corporation
KLH Capital Partners, L.P.
n/a
Valley Fire Protection Systems, LLC
Building Industry Partners, LLC, Private Equity Arm
n/a

Other Strategic Buyer Transactions Closed

Target
Buyer
Value($mm)

INTEX Millwork Solutions, LLC
The AZEK Company Inc.
$15.00
Project Design Consultants, LLC
Bowman Consulting Group Ltd.
$11.00
Assets of Ozark's Modern Insulation
Installed Building Products, Inc.
$2.20
Southern Arizona Plumbing LLC
Rite Way Heating, Cooling and Plumbing, LLC
n/a
Apollo Concrete Coatings
ReVamp Companies
n/a
Lonestar Sierra, LLC
Industry Services Company, Inc.
n/a

Served as advisor to Clune Construction Company on their sale to the Clune Construction Company ESOP Trust

Served as advisor to Midwest Drywall Co., Inc. as they became 100% ESOP Owned

Served as advisor to Del-Air on their $45 million debt financing

Served as advisor to Consolidated Minerals, Inc. on their sale to the CMI ESOP Trust

Served as advisor to MMC Corp on their acquisition of Building Central Services, Inc.

Served as advisor to Williams Electric Co., Inc. on their sale to Parsons

Served as advisor to Energy Air, Inc. on their sale to the Energy Air, Inc. ESOP Trust

Served as advisor to American Builders Supply, Inc. on their acquisition by Bluewolf Capital Partners, LLC

Served as advisor to Tri-City Electrical Contractors as they transferred an interest to Tri-City ESOP Trust

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:

“Construction Employment Increases by 16,000 in August, Says ABC” Associated Builders and Contractors, 2 September, 2022.
Dezember, R. “Lumber Prices Fall Back to Around Their Pre-Covid Levels.” Wall Street Journal, 27 September, 2022.
“Lumber - 2022 Data - 1978-2021 Historical - 2023 Forecast - Price - Quote – Chart” Trading Economies, 3 October, 2022.
Friedman, N. “U.S. Home Sales and Prices Fell in August as Mortgage Rates Rose.” Wall Street Journal, 21 September, 2022.
Dezember, R. “Lumber Prices Fall Back to Around Their Pre-Covid Levels.” Wall Street Journal, 27 September, 2022.
“Lumber - 2022 Data - 1978-2021 Historical - 2023 Forecast - Price - Quote – Chart” Trading Economies, 3 October, 2022.
Bousquin, J. “Construction planning numbers fall.” Construction Dive, 8 September, 2022.

Building Products & Construction Q3 2022

Industry Trends

Construction Labor Market Continues to Loosen

Lumber Prices at 2-Year Low

Home Building Market Slows Down

Non-residential Construction Planning Up Over the Year

Largest Transactions Closed

Other Financial Buyer Transactions Closed

Other Strategic Buyer Transactions Closed

PCE Transactions

Contacts

Michael Poole

Michael Rosendahl

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Building Products & Construction Q3 2022

Industry Trends

Construction Labor Market Continues to Loosen

Lumber Prices at 2-Year Low

Home Building Market Slows Down

Non-residential Construction Planning Up Over the Year

Largest Transactions Closed

Other Financial Buyer Transactions Closed

Other Strategic Buyer Transactions Closed

PCE Transactions

Contacts

Michael Poole

Michael Rosendahl

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