Blog Author

Mike Rosendahl

E: mrosendahl@pcecompanies.com

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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

 

Source S&P Capital IQ as of 10/11/2022 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. “Construction Employment Increases by 16,000 in August, Says ABC” Associated Builders and Contractors, 2 September, 2022.
  2. Dezember, R. “Lumber Prices Fall Back to Around Their Pre-Covid Levels.” Wall Street Journal, 27 September, 2022.
  3. “Lumber - 2022 Data - 1978-2021 Historical - 2023 Forecast - Price - Quote – Chart” Trading Economies, 3 October, 2022.
  4. Friedman, N. “U.S. Home Sales and Prices Fell in August as Mortgage Rates Rose.” Wall Street Journal, 21 September, 2022.
  5. Dezember, R. “Lumber Prices Fall Back to Around Their Pre-Covid Levels.” Wall Street Journal, 27 September, 2022.
  6. “Lumber - 2022 Data - 1978-2021 Historical - 2023 Forecast - Price - Quote – Chart” Trading Economies, 3 October, 2022.
  7. Bousquin, J. “Construction planning numbers fall.” Construction Dive, 8 September, 2022.
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