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Nicole Kiriakopoulos

E: nicolek@pcecompanies.com

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Industry Trends

Construction Material Prices Remain in Flux

In February, construction material prices climbed by 1.4%, marking a 1.5% increase year-over-year. Specifically, nonresidential material prices rose 1.3% from January and 1.8% from a year ago. Notable contributors to the increase include softwood lumber, iron, and steel. These increases have contributed to heightened inflation data in the month, suggesting that interest rate cuts may be a longer way off than previously anticipated. 1

Residential Housing Market Expected to Rebound

In Q1 2024, the U.S. homebuilding industry continued to face high-interest rates and limited housing inventory, sustaining the challenges of 2023. Despite these headwinds, single-family housing starts are forecasted to increase by 5-12%, driven by pent-up demand and a shift in builder and consumer behavior towards new suppliers and cost-effective strategies. However, existing home sales are expected to decline by 4%, and multi-family starts could decrease significantly, reflecting a complex but gradually improving market landscape.2

M&A within the Construction Industry Booms in Q1

Q1 2024 has seen an increase in home builder mergers and acquisitions (M&A), with five transactions and two announcements already this year, compared to 12 deals in all of 2023. Strong balance sheets, favorable market conditions, and public builders' advantages over smaller private builders have fueled this M&A explosion. Key drivers include public builders' ability to offer incentives and mortgage rate buydowns, their access to labor/materials, and their relationships with land sellers.3

Home Depot Acquires SRS

Home Depot announces an $18.25 billion acquisition of SRS Distribution, targeting professional roofing and construction supplies. SRS, with 760 locations and 4,000 trucks, expands Home Depot's pro-business segment. The move aims to tap into the wholesale market and bolster e-commerce efforts. Upper management views this as a strategic shift to capture sales from specialty suppliers. The deal, funded through cash and new debt, is expected to close by the fiscal year's end.4

Largest Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Argos North America Corp.
  • Summit Materials, Inc.
  • $4,039.70
  • PGT Innovations, Inc.
  • MITER Brands
  • $3,196.88
  • Martin Marietta South Texas Cement, LLC/Martin Marietta's South Texas ready-mix concrete operations
  • CRH Americas Materials, Inc.
  • $2,100.00
  • Yak Access, LLC
  • United Rentals, Inc.
  • $1,150.00
  • Signature Systems Group, LLC
  • Myers Industries, Inc.
  • $350.00
  • BMC Enterprises, Inc.
  • Breedon Group plc
  • $300.50
  • certain assets and assumed certain liabilities of Crescent Ventures, LLC
  • Dream Finders Holdings LLC
  • $185.00
  • Key Knife, Inc./Key Knife Canadian Investments Corporation
  • Kadant Canada Corp.
  • $156.00
  • Josam Company
  • Watts Water Technologies, Inc.
  • $102.80
  • LaGuardia Gateway Partners, LLC
  • Meridiam Infrastructure Finance S.a.r.l.
  • $58.00

Other Financial Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Glass Products Inc.
  • Ironbridge Equity Partners Management IV Limited
  • n/a
  • Sun Industrial Group, LLC
  • Fernweh Group LLC
  • n/a
  • SBG Holdings, Inc.
  • Charger Investment Partners LP
  • n/a
  • SmitHahn Company, Inc.
  • Gmac Holdings, LLC
  • n/a
  • Pacific Building Systems Inc.
  • Roots Equity Group LLC
  • n/a
  • Loenbro, LLC
  • Braemont Capital Management LLC
  • n/a
  • CHA Consulting, Inc.
  • H.I.G. Capital, LLC
  • n/a
  • Guardian Fire Protection Services, LLC
  • Knox Lane LP
  • n/a
  • Best in Class Technology Services, LLC
  • Investcorp Holdings B.S.C.
  • n/a
  • Quick Roofing, LLC
  • Centre Partners Management LLC
  • n/a

Other Strategic Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • LaGuardia Gateway Partners, LLC
  • Vantage Airport Group (Us) Ltd.
  • $57.00
  • Homebuilding business and assets of Creekside Custom Homes, LLC
  • United Homes Group, Inc.
  • $16.94
  • Sustainable Energy Group, Inc.
  • CuraScientific Corp.
  • $5.00
  • Causseaux, Hewett, & Walpole, Inc.
  • NV5 Global, Inc.
  • $0.06
  • Gargiulo Construction Company, Inc.
  • Sweeney Excavation, Inc.
  • n/a
  • Toncco, Inc.
  • Aegion Corporation
  • n/a
  • Huston Electric Inc.
  • Cassady Electrical Contractors, Inc.
  • n/a
  • Parks Heating & Cooling, Inc.
  • Redwood Services, LLC
  • n/a
  • Stan's Home Services Holdings Inc
  • Master Trades Group
  • n/a
  • Osttend Landfill, Ltd
  • Frontier Access, LLC
  • n/a

 

Source S&P Capital IQ as of 4/16/2024 and PCE Proprietary Data

PCE Transactions

Contacts

Nicole Kiriakopoulos

Chicago Office

224-520-1068 |

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Michael Poole

Orlando Office

407-621-2112 |

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Will Stewart

Orlando Office

407-621-2124 |

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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. 1. "Construction Material Prices Climbed in February." NRCA Roofing News, 19 Mar. 2024.
  2. 2. The Farnsworth Group. "Construction Industry Outlook for Builders." The Farnsworth Group.
  3. 3. "Home Builder M&A Explodes in 2024." JBREC.” Contractor, 19 Apr. 2023.
  4. 4. "Home Depot's $18 Billion Bet: Expanding Beyond Big Orange Stores." The Wall Street Journal, 25 March 2024.
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