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Nicole Kiriakopoulos

E: nicolek@pcecompanies.com

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Industry Trends

Housing Starts Continue Increase in Q2 Of 2023

In August, housing starts experienced a short-term dip of 11.3% to 1.283 million units, their lowest since June 2020, influenced partly by rising mortgage rates and impacts like Hurricane Hilary in the West. However, persistent low inventory of pre-owned homes across the nation assures continued demand for homebuilders. This long-term demand is underscored by the 6.9% surge in building permits to 1.543 million units in August, indicating a market rebound in Q4.1

Construction Labor Demand Outpaces Overall Market

Despite a nationwide slowdown in job growth, the construction sector remained stable in July and added 22,000+ jobs in August, particularly in nonresidential and heavy engineering. Enhanced infrastructure spending contributed to this hiring boost. While overall employment earnings grew, construction workers enjoyed even better gains, with hourly earnings increasing by 5.7% and weekly earnings by6.2%.2

Construction Input Prices Continue to Rise

In August 2023, U.S. residential and nonresidential construction input prices grew by 1.5% month-over-month. The rise was largely driven by increased energy costs, with crude petroleum up 8.9% and unprocessed energy materials increasing by 5.4%. Industrial construction inputs also increased by 1.4% in August and remained 1.9% above a year ago. Price increases are expected to continue as oil-producing countries limit output. 3

CHIPS Act Drives Growth in Construction of Manufacturing Facilities

Since July 2022, investments in building domestic manufacturing facilities have surged by nearly 71%, largely due to the CHIPS Act. Private firms have poured over $511 billion into initiatives ranging from chip fabrication and electric vehicle battery plants to clean energy and biotech infrastructures. This onshoring trend in the U.S. is further emphasized by several upcoming projects, each worth $1 billion or more, signifying a sustained momentum in manufacturing facility construction for the foreseeable future.4

Largest Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Crossroads Roofing Supply, Inc.
  • Beacon Roofing Supply, Inc.
  • $804.50
  • Blueridge Transportation Group, LLC
  • North America ACS Infrastructure Development
  • $410.70
  • Bigham Cable Construction, Inc.
  • Dycom Industries, Inc.
  • $127.00
  • Plumbing and HVAC distribution business of Gateway Supply Company, Inc.
  • Watsco, Inc.
  • $106.34
  • Assets Of the Residential Insulation Business Best Insulation
  • TopBuild Corp.
  • $95.00
  • Substantially All the Assets of Williams Industrial Services Group
  • EnergySolutions, Inc.
  • $60.00

Other Financial Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • WSB & Associates, Inc.
  • GHK Capital Partners LP
  • n/a
  • Matthew's Wall Anchor & Waterproofing Services
  • Tecum Capital Management, Inc.
  • n/a
  • Isolatek International Corporation
  • SK Capital Partners, LP
  • n/a
  • Trades Holding Company, LLC
  • CPC Management LLC
  • n/a
  • STARC Systems, Inc.
  • North Branch Capital, LLC
  • n/a
  • Excel Mechanical, Inc.
  • Taconic Capital Advisors L.P.
  • n/a

Other Strategic Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Greenspeed Energy Solutions, LLC
  • NextRidge, Inc.
  • $14.98
  • Hot-mix asphalt plant in Myrtle Beach
  • Construction Partners, Inc.
  • $9.50
  • Collins Building & Contracting, Inc.
  • Malachite Innovations, Inc.
  • $5.04
  • Standard Plumbing-Heating-Control-Corp.
  • Automated Logic Contracting Services, Inc.
  • n/a
  • Raineri Building Materials, Inc.
  • BMC Enterprises, Inc.
  • n/a
  • AK HVAC Inc.
  • Marathon HVAC Service, LLC
  • n/a
  • J&R Restoration, Inc.
  • BluSky Restoration Contractors, LLC
  • n/a
  • Pioneer Sand Company, Inc.
  • SiteOne Landscape Supply, Inc.
  • n/a
  • Allphase Restoration And Construction, LLC
  • HighGround Restoration Group, INC.
  • n/a
  • Oberson's Nursery and Landscape Inc./Dyna-Mist
  • Visterra Landscape Group
  • n/a
  •  

 

Source S&P Capital IQ as of 10/12/2023 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. Mutikani, Lucia. "Single-family housing starts drop 4.3% in August." Reuters, 19 Sept. 2023.
  2. 2. Carrick, Alex. "Except for Construction, Deceleration in U.S. Jobs Growth in August." Chief Economist, 3 Sept. 2023.
  3. 3. WPJ Staff. "U.S. Construction Input Costs Uptick in August." Residential News, Denver Edition, 18 Sept. 2023.
  4. 4. Obando, Sebastian, and Julia Himmel. "Spending in the Manufacturing Sector Surges Post-CHIPS Act." Construction Dive. 15 September, 2023
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