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Mike Rosendahl

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Industry Trends

Housing Starts and Building Permits Increase

Homebuilding reached an eight-month high in November despite the higher prices for raw materials and labor shortages. Housing starts increased 11.8%, the highest level since March 2021, while permits increased 3.6%. A survey of home builders shows continued confidence in the growth trajectory. 1

Builders FirstSource, Inc Acquires National Lumber Company

Builders FirstSource, Inc. completes its first acquisition in 2022 with the acquisition of National Lumber Company on January 5 for $282.5 million. This acquisition is Builders FirstSource, Inc.’s seventh acquisition since May 2021. Builders FirstSource, Inc. is one of the leading lumber distributors in the U.S., with revenues over $17 billion for the most recent period.2

Building Products Distributor Files for IPO

Specialty Building Products (“SBP”), a leading distributor of branded specialty building products in the U.S. filed with the SEC on January 4, 2022 to raise up to $100 million in an IPO. SBP believes it is the largest and fastest-growing distributor of specialty building products having a compounded annual growth rate of 25% over the last ten years. Acquisitions of U.S. Lumber, Alexandria Moulding, Reeb, DW Distribution, and Millwork Sales have contributed to the company's growth. The Duluth, GA based company reported revenues of $2.3 billion for the 12 months ended September 30, 2021.3

Infrastructure Bill to Drive Construction Growth

Congress passed the Infrastructure Investment and Jobs Act on November 6, 2021, which provides $110 billion for funding to repair roads, bridges, and other major transportation projects, $17 billion in port infrastructure and $25 billion in airports, as well as funding for clean energy and clean water. Contractors have been anticipating such a bill for years and the result will bring about significant new construction projects in the next few years. Implementation of funds may be delayed as the industry continues to face labor shortages.4

Skanska Negligent in Barge Incident

Skanska USA was found negligent in the preparations of their job site at Pensacola Bay Bridge ahead of Hurricane Sally in 2020. The judge ruled the firm did not implement its contractually obligated emergency response plan. The company’s failure to do so resulted in 27 barges breaking loose, damaging the structure, and causing a nine-month closure of the traffic flow. The ruling indicates Skanska’s financial liability cannot be limited to $1.2 million – the value of the barges. The state court will now decide if Skanska can be held responsible for economic losses. 5

Construction Companies Targeted for Cyberattacks

Over the last year, the construction industry has become the leading target for ransomware attacks. Companies targeted by hackers range from small family-owned construction to large international firms that consult on projects over $20 billion annually. Hackers are increasingly drawn to the segment due to the relative lack of cybersecurity present. Additionally, with the integration of smart systems in buildings, the targets pose an ever more attractive target as the hacker can manipulate physical systems through digital means. Construction firms need to start implementing stronger cybersecurity strategies.6

Lumber Prices Rise Again

Flooding in British Columbia has caused a rush on the supply of lumber as builders fear lack of access to supplies due to flooding that washed out roads and railways in November. Futures for January deliveries increased to $1,089.10 per thousand board feet as of December 17. This price is still well below the high set in the springtime when futures were trading over $1,700 per thousand board feet but still well above historical levels for lumber. The four-year average for lumber for the period of 2015 – 2019 had lumber prices below $400.7

Largest Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Blattner Holding Company, Inc.
  • Quanta Services, Inc.
  • $2,995.84
  • Lehigh West Region Business
  • Martin Marietta Materials, Inc.
  • $2,300.00
  • North American building products businesses of Boral Industries Inc.
  • Westlake Chemical Corporation
  • $2,150.00
  • Sunpro Solar, Inc
  • The ADT Security Corporation
  • $880.20
  • Henkels & McCoy Group, Inc.
  • MasTec, Inc.
  • $593.04
  • EZ-FLO International, Inc.
  • Reliance Worldwide Corporation Limited
  • $325.00
  • Meridian Brick LLC
  • General Shale Brick, Inc.
  • $250.00
  • FrontLine Power Construction, LLC
  • Orbital Energy Group, Inc.
  • $214.01
  • Assets in the Business of Manufacturing Vinyl Windows and Doors of Anlin Industries, Inc.
  • PGT Innovations, Inc.
  • $126.07
  • Cast-Crete USA, Inc.
  • Monomoy Capital Partners
  • $97.00

Other Financial Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • TriStruX, LLC
  • Huron Capital Partners, LLC
  • n/a
  • Safe-Way Garage Doors LLC
  • CapitalWorks, LLC
  • n/a
  • Ohio Valley Excavating LLC
  • Crestview Partners, L.P.
  • n/a
  • Odin Construction Solutions, Inc.
  • ORIX Advisers, LLC
  • n/a

Other Strategic Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Trojan Leisure Products LLC
  • Latham Group, Inc.
  • $90.00
  • Reflectix, Inc.
  • Balcan Innovations Inc.
  • $82.50
  • Magnetic Seal LLC
  • Ducommun LaBarge Technologies, Inc.
  • $69.50
  • Jake Marshall, LLC
  • Limbach Facility Services LLC
  • $27.31
  • California Building Products, Inc.
  • TopBuild Corp.
  • $19.30
  • BW Electrical Services LLC
  • Charge Enterprises, Inc.
  • $17.99

 

Source S&P Capital IQ as of 1/11/2022 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. Reuters, “U.S. Housing Starts, Building Permits Increase in November,” December 16, 2021.
  2. LBM Journal “Builders FirstSource Acquires National Lumber,” January 5, 2022.
  3. Specialty Building Products, Inc. Form S-1 Registration Statement, www.sec.gov
  4. Obando, Sebastian, “How Firms Are Preparing For An Influx of Civil Spending,” Construction Dive, December 8, 2021.
  5. Bousquin, Joe, “Skanska Found Negligent in Pensacola, Florida, Bridge Case,” Construction Dive, January 5, 2021.
  6. Obando, Sebastian, “Tech adoption makes construction industry top target for cyberattack,” Construction Dive, December 1, 2021.
  7. Dezember, Ryan “Sky-High Lumber Prices Are Back,” The Wall Street Journal, December 19, 2021.
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