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BUILDING PRODUCTS & MATERIALS

0

INDUSTRY UPDATE │ OCTOBER 2015

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BUILDING PRODUCTS & MATERIALS GROUP OVERVIEW

1

CONTENTS

WHAT WE’RE READING

ECONOMIC UPDATE

M&A MARKET TRENDS

SELECT SECTOR OVERVIEWS & TRENDs

PUBLIC MARKETS

PUBLIC COMPARABLES

M&A ACTIVITY

CONTACTS

Mike HoganManaging [email protected]+1 (804) 915-0104

Ryan NelsonManaging [email protected]+1 (804) 915-0121

Trey PackardVice [email protected]+1 (804) 887-6016

INTRODUCTION

Harris Williams & Co. is pleased to present our Building Products and MaterialsIndustry Update for October 2015. This report provides commentary and analysison current capital market trends and merger and acquisition dynamics within theglobal building products and materials industry.

We hope you find this edition helpful and encourage you to contact us directly ifyou would like to discuss our perspective on current industry trends and M&Aopportunities or our relevant industry experience.



OUR PRACTICE

Harris Williams & Co. is a leading advisor to the building products and materialsindustry. Our significant experience covers a broad range of end markets,industries, and business models.

Construction

Materials

Building

Products

Distribution &

Services has been acquired by

a portfolio company of

has been acquired by

Select Atlanta, Georgia

aggregates assets of LaFarge

SA have been acquired byhas been acquired by

a division of


a subsidiary of

Aggregates

Asphalt

Aluminum

Bricks

Clay

Glass

Precast Concrete /

Ready Mix

Steel

Stone

Acoustical

Cabinets and

Countertops

Carpet and Flooring

Gypsum / Wallboard

Electrical Fixtures

HVAC

Lumber

Plumbing Fixtures

Roofing

Siding

Tools and Hardware

Windows and Doors

Architectural and

Engineering

Installation and

Contracting

Lumber and

Hardware

Plumbing

Roofing and Siding

Site Development

Wallboard

Construction

MaterialsBuilding Products

Distribution &

Services






a division of



a subsidiary of





a portfolio company of a portfolio company of



is being acquired by






http://www.harriswilliams.com/

mailto:[email protected]




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RECENT MOMENTUM IN BUILDING PRODUCTS









Harvey: Company Description

Leading building products supplier focused on Northeast region

Founded in and family-owned since 1961, headquartered outside Boston in Waltham, MA

Vertically integrated window and door manufacturer and distributor

Distributes broad line of exterior building products including windows, siding and roofing to over 44,000 customers annually through its network of 33 warehouses

Woodcraft Industries: Company Description

Best-in-class cabinet door and components manufacturer with highly automated and efficient operations

Offers a comprehensive line of over one million hardwood and engineered wood SKUs in a wide variety of styles, sizes, designs, and wood species

Focus on providing high-quality components and just-in-time (“JIT”) service to large, demanding cabinet OEMs

US LBM: Company Description

Provides a comprehensive line of specialty products, including engineered lumber, windows and doors, roofing and siding, drywall, and cabinetry

Over 30,000 residential and commercial construction customers

Broad coverage, going to market through 19 local or regional brands with 150 locations across 22 states in the Northeast, Midwest and Southeast United States

Infiltrator: Company Description

Leading manufacturer of engineered plastic chambers, synthetic aggregate leachfields, tanks, and accessories for the onsite wastewater and stormwater industries

Pioneer in innovative plastic technologies for onsite wastewater management

Demonstrated ability to drive conversion through enhanced product performance and installed cost savings


2

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WHAT WE’RE READING

3

JELD-WEN GROWTH CONTINUES WITH PURCHASE OF LACANTINA DOORS

U.S. CONSTRUCTION FIRMS MORE STABLE THAN A YEAR AGO

EXPERT: ECONOMY “GAINING ITS FOOTING”

DODGE MOMENTUM INDEX RISES 5.8% AS INSTITUTIONAL SECTOR RALLIES

Business Wire 10/5/2015

A period of rapid growth for JELD-WEN, the world’s largest manufacturer of windows and doors, is continuing with theannouncement today that the company has acquired LaCantina Doors, a manufacturer of folding and multislide doorsystems based in Oceanside, California. Terms of the acquisition were not disclosed. The acquisition demonstrates JELD-WEN’s commitment to aggressive growth via acquisition and core innovation. “With the booming popularity of foldingand multislide door systems, the acquisition gives us additional resources, capacity and a leading brand in this growingsegment of the market,” said Colin Shaffner, JELD-WEN senior vice president of windows. “It’s a great fit with our missionto continue to push design innovation and offer best-in-class products to our customers not only in North America, butworldwide.”

Read the full article here.

The Wall Street Journal 10/8/2015

In a positive sign for the U.S. economy—albeit incrementally so—the financial health of construction companies isimproving. Creditsafe Inc., a U.K.-based supplier of online business-credit reports, assessed the credit of roughly 1.7million American construction firms to find that roughly 250,000 now rank as high credit risks, down by 5.8% from a yearago. Meanwhile, the number of those classified as low risk increased by 1.7% to roughly 1 million. The credit-researchfirm’s findings match with a generally improving outlook for the construction industry. U.S. construction spending inJuly hit its highest level since 2008.


Concrete Construction 9/25/2015

U.S. construction starts, excluding residential, totaled $200 billion the first eight months of 2015, a 1.8% drop from a yearearlier, according to a report from CMD Group. Specifically, commercial (retail, hotel/motel, office, warehouses) isdown 0.7%, industrial/manufacturing is up 46.6%, institutional (religious, medical, educational) is down 3.5%, and heavyengineering (airport, roads, bridges, water, sewage) is down 6.3%. Also, total construction employment increased by3,000 jobs in August, after a climb of 7,000 in July, the U.S. Bureau of Labor Statistics says. There are 219,000 moreconstruction jobs compared to a year ago, and 113,000 more since the start of 2015.


Construction Dive 10/9/2015

Driven by a 12% increase in institutional building planning, the Dodge Momentum Index rose 5.8% between August andSeptember. That gain was higher than the2.8% increase between July and August. Dodge credits the increase in theinstitutional building sector to the continued recovery of state and local budgets, which finance suchprojects. Commercial construction rose 1.8% in the same period, and Dodge said this relatively low rise signals a morestable period in that sector's growth.


UPWARD GRIND RESUMES, BRINGING THE HOUSING INDICATOR BACK NEAR ITS PEAK LEVEL

Fannie Mae 10/7/2015

Fannie Mae’s Home Purchase Sentiment Index™ (HPSI) increased to 83.8 in September as consumer confidence in thehome buying and selling market bounced back from a recent dip, suggesting continued gradual improvement inhousing activity. The HPSI Good Time to Sell component increased 13 points on net in September due likely to a stronghome price environment coupled with a slight improvement in consumers’ economic outlook. Additionally, the GoodTime to Buy component increased 3 points on net as high rental costs may be encouraging more renters to considerhomeownership. Although net home price and mortgage rate expectations dipped in September, consumers'confidence in their employment and financial situations climbed 2 and 3 points, respectively, further suggesting apossible firmer footing for housing.





http://www.businesswire.com/news/home/20151005006397/en/JELD-WEN-Growth-Continues-Purchase-LaCantina#.VhwfLC7BzRY

http://blogs.wsj.com/economics/2015/10/08/u-s-construction-firms-more-stable-than-year-ago/

http://www.concreteconstruction.net/economic-conditions/expert-economy-gaining-its-footing_o.aspx?dfpzone=general

http://www.constructiondive.com/news/dodge-momentum-index-rises-58-as-institutional-sector-rallies/407043/

http://www.fanniemae.com/portal/about-us/media/corporate-news/2015/6297.html

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94

96

98

100

102

104

106

108

110

Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15

ECONOMIC UPDATE

4

INDUSTRIAL PRODUCTION INDEX

BUILDING PRODUCTS AND MATERIALS

GDP

Real GDP increased by an annual rate of3.9% in the second quarter of 2015, whileoverall GDP increased 2.7% since Q2 2014

This increase primarily reflects positivecontributions from personal consumptionexpenditures (PCE), exports, nonresidentialfixed investment, state and localgovernment spending, and residentialfixed investment

Current dollar GDP increased 6.1%, or$264.4 billion in the second quarter to alevel of $17.9 trillion

The Gross Domestic Income (GDI), whichmeasures the value of the production ofgoods and services in the U.S. as the costsincurred and the incomes earned inproduction, increased 0.7% in the secondquarter of 2015

Industrial production decreased 0.4% inAugust after increasing 0.9% in July

At 107.1% of its 2012 average, total industrialproduction in August was 0.9% above itsprior-year level

Capacity utilization for the industrial sectorfell 0.4% in August to 77.6%, a rate that is2.5% below its long-run (1972-2014) average

Manufacturing output fell 0.5% in Augustprimarily because of a large drop in motorvehicles and parts that reversed asubstantial portion of its jump in July;production elsewhere in manufacturingwas unchanged

The production indexes for mining fell 0.6%in August, while the index for utilities rose0.6%

Seasonally Adjusted

Seasonally Adjusted

(Change in billions of dollars)

(Indexed to 2012)


(2.5%)

(2.0%)

(1.5%)

(1.0%)

(0.5%)

0.0%

0.5%

1.0%

1.5%

Q22006

Q22007

Q22008

Q22009

Q22010

Q22011

Q22012

Q22013

Q22014

Q22015

107.1%


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ECONOMIC UPDATE

5

PERSONAL CONSUMPTION EXPENDITURES

ECONOMIC SENTIMENT

In August, personal income increased$52.5 billion, or 0.3%, while (PCE)increased $69.6 billion, or 0.5%

Wages and salaries increased $35.6billion in August, compared to anincrease of $43.8 billion in July

Purchases of durable goods increased1.2%, compared to an increase of 1.3% inthe previous month; while purchases ofnon-durable goods increased 0.6%,compared to an increase of 0.4% in July

The economic sentiment index measureshow consumers view prospects for theirown financial situation, how they view thenear-term general economy prospects,and their long-term view of economicprospects

The Leading Economic Index (LEI) for theU.S. improved in August by 0.1% to 123.7,following no change in July, and a 0.6%increase in June

For the six months ending August 2015, theleading economic index increased 1.8%(approximately a 4% annual rate), exactlythe same as the 1.8% growth rate duringthe previous six months

The continued rise in LEI suggests economicgrowth will remain moderate into the NewYear, with little reason to expect growth topick up substantially



(percentage change in 6-month rolling average)

(indexed to 2010)

0.00%

0.10%

0.20%

0.30%

0.40%

0.50%

0.60%

100

107

114

121

128

Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15


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ECONOMIC UPDATE

6

CONSUMER CONFIDENCE INDEX (CCI)

KEY INTEREST RATES

The Consumer Confidence Indeximproved to 103.0 in September, up from101.3 in August

Consumer confidence is currently up9.2% over the last six months, and 15.7%higher than September 2014

Consumers’ assessment of currentconditions was more positive inSeptember – those claiming businessconditions are “good” increased from23.7% to 28.0% and were somewhatmixed about the job market

Consumers’ more positive assessment ofcurrent conditions fueled this month’sincrease, and drove the PresentSituation Index to an 8-year high

The 30-year mortgage rate decreased inSeptember 2015 to 3.89%

The current mortgage rate is 27 basispoints lower than the rate fromSeptember 2014

The Fed has indicated that it couldincrease rates over the next six months



Seasonally Adjusted

0

20

40

60

80

100

120

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

30-Yr Mortgage Rates 10-Yr Treasury Effective Federal Funds Rate

Indexed to 1985


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ECONOMIC UPDATE

7

U.S. NON-RESIDENTIAL CONSTRUCTION

U.S. HOUSING STARTS

U.S. housing starts in August were at aseasonally adjusted annual rate of1,126,000, 3.0% below the July estimate of1,161,000, and 16.6% above the prioryears rate of 966,000

Residential starts hit an annualized rate of1.21 million in July, the most sinceOctober 2007

Rising employment and historically lowmortgage rates are enticing buyers, whileincreasing prices induced by a lack ofhomes on the market is an incentive tostart new developments

Housing starts continue to rebound fromunprecedented lows reached in 2009,yet remain ~30% below the 50-yearaverage of 1.5 million starts per year

New residential construction is projectedto grow at a 22% CAGR from 2014 to 2018



0

500

1,000

1,500

2,000

2,500

1960 1968 1976 1984 1992 2000 2008 2016P

Single Family Multi Family50-Year Average Average Recesion Low

(units in 000’s)2014 Housing Starts: ~30% below 50-year average

Aug. 2015 Total: 1,126M-o-M Δ: (3.0%)Y-o-Y Δ: 16.6%

Non-residential construction has laggedin recovery but has increasedconsiderably since March of 2015

Non-residential construction onlyincreased by 0.3% from July to August,but has increased 11.1% over the last sixmonths

Several sectors within non-residentialconstruction that continue to seespending increases include commercial,industrial, and office/hotel

($ in billions)

Seasonally Adjusted Annual Rate

-12.0%

-8.0%

-4.0%

0.0%

4.0%

8.0%

12.0%

$450

$500

$550

$600

$650

$700

$750

Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15

Non-Residential Construction Non-Residential Construction M-o-M Change


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ECONOMIC UPDATE

8

REPAIR AND REMODELING SPEND

U.S. REMODELING MARKET INDEX

Repair and remodeling spend reachedover $155 billion in 2014, and continuesto experience significant growth ashomeowners invest in their homes

Rising home prices indicate rising homeequity which should encourageimprovement spending by current andnew owners

Projected compound annual growth of4.4% for 2014 – 2018

Q2 RMI was 59 and marked the ninthconsecutive quarter for an RMI over 50

The overall RMI averages the indicatorsof current and future remodeling activity.An RMI over 50 indicates that remodelersare reporting higher activity than theprevious quarter

On a seasonally adjusted basis, theResidential Remodeling Index (RRI)posted a gain of 3.3% year-over-year inthe third quarter

In 2015, the remodeling market is trackingthe overall housing market due to theinability of younger households topurchase their first homes and beginremodeling projects



Index values greater than 50 indicate activity higher than

the previous quarter

$0

$50

$100

$150

$200

2002 2004 2006 2008 2010 2012 2014 2016P 2018P

($ in billions)

2014 – 2018 CAGR: 4.4%

40

45

50

55

60

65

Q1

2012

Q3

2012

Q1

2013

Q3

2013

Q1

2014

Q3

2014

Q1

2015


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M&A MARKET TRENDS

9

MARKET OBSERVATIONS

BUILDING PRODUCTS QUARTERLY M&A ACTIVITY

2015 Global M&A activity is on pace to hit the highest level on record due to a buying spree from companieslooking for growth

The total value of deals announced this year could reach $4.58 trillion if markets maintain the current pace; thiswould comfortably exceed the $4.29 trillion record set in 2007

− 45 $10+ billion M&A deals were announced in the first nine months of 2015, up 89% from the same periodlast year and the highest first nine months for volume and activity on record

− Average deal size has increased for the fifth year-on-year period to reach the highest average on record

Favorable conditions continue to exist in the credit markets as leveraged loan multiples remain robust, withaverage debt multiples approximately 5.1x EBITDA for issuers through H1 2015

Large corporations continue to drive M&A activity with bloated cash balances, soaring stock prices, andrelatively inexpensive credit

Market volume in 2015 has been driven primarily by outsized activity within a few sectors, most notablyhealthcare and TMT

− North American building products deal activity is down approximately 9% YTD over the prior year



Note: Includes all building products, construction materials, or forest products, for M&A transactions announced in the U.S. or Canada

Total Transactions: 176

YOY Change: 35.4%


YOY Change: 14.8%


YOY Change: (5.4%)


YOY Change: (18.3%)


YOY Change: 19.9%

0

10

20

30

40

50

60

70

Q1

2010

Q3

2010

Q1

2011

Q3

2011

Q1

2012

Q3

2012

Q1

2013

Q3

2013

Q1

2014

Q3

2014

Q1

2015

Q3

2015

Nu

mb

er

of

An

no

un

ce

d M

&A

De

als

Total Transactions

Through Q3: 131


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SELECT SECTOR OVERVIEWS & TRENDS

10

LUMBER AND WOOD PRODUCTS

ROOFING

WINDOWS AND DOORS

Description

Lumber, boards, beams, bolts oriented strand board, poles, shingles, siding,and wood chips

Industry Commentary:

70% of U.S. lumber demand is driven by housing, including new constructionand remodeling

Significant price declines continue into Q3 2015

Three-month sales expectations nationally fell for a third-straight month andneared levels last seen in January

Framing Lumber Composite Price Index

($ per thousand board feet)

Description

Roofing market includes bituminous, wood, and tile roofing used in residentialapplications and metal elastomeric, and plastic roofing used in non-residential applications


US demand for roofing is projected to rise 3.9% annually to 252 million squaresin 2019, valued at approximately $21.4 billion dollars

Demand for roofing is closely linked to building construction expenditures, buthas been more sheltered than other building products markets from thehousing slump due to the nondiscretionary need for roof repair andreplacement

Houses need to be re-roofed every fifteen years on average and the agingU.S. housing stock will drive continued demand for replacement

Additionally, renewed strength in new housing construction and a generallystronger economic climate will support growth

Roofing Demand by Primary Segment

Description

Windows and doors market includes metal, wood, and vinyl windows anddoors for residential and non-residential markets


Window and door demand is primarily driven by new commercial andresidential construction as well as repair and remodel spending

Expected growth of 2.8% in Q4 2015 due to sustained growth in retail sales ofhome improvement products and ongoing gains in house prices across muchof the country

Annual home improvement spending growth is expected to accelerate to4.0% in the first quarter of 2016 due largely to recent pick up in home salesactivity as recent homebuyers typically spend about a third more on homeimprovements than non-movers

Leading Indicator of Remolding Activity – LIRA ($ in billions)



$100

$200

$300

$400

$500

Residential Reroofing

49.4%

Nonresidential Reroofing

34.5%

New Residential9.1%

New Nonresidential

7.0%

$80

$90

$100

$110

$120

$130

$140

$150

$160

Q1'11

Q1'12

Q1'13

Q1'14

Q1'15

Q1'16P


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11

WALLBOARD AND PLASTER

HVAC

PLUMBING FIXTURES AND FITTINGS

Description

Primarily made from gypsum, products include wallboard, plaster,plasterboard, molding, ornamental moldings, statuary, and architecturalplasterwork


Industry executives are uncertain on ability to continue price increases intoQ4 of 2015 and early 2016

Gypsum product demand is primarily driven by new commercial andresidential construction as well as repair and remodel spending

Over the past two years, rising wallboard prices and cost-saving measureshave improved industry profit margins

New home inventories are at historically low levels and as demand for newhomes grows, builders will respond by increasing their stock

U.S. Wallboard Demand(billions of square feet)

Number of World-Wide A/C Units(millions of units)

Residential Remodeling Index (RRI)



0

25

50

75

100

125

Annual Q1 Q2 Q3 Q4

2006 2008 2010 2012 2014

Description

Residential, commercial, and industrial heating, ventilation, air-conditioning,and refrigeration equipment


U.S. shipments of central air conditioners and air-source heat pumps weredown through 1H 2015

HVAC demand is primarily driven by residential and non-residentialconstruction, HVAC replacement, and weather patterns

Aging domestic buildings (75% of buildings were built before the 1980s) arefueling the demand for replacement equipment

New minimum energy efficiency standards for air conditioning andcorresponding tax credits are driving replacement demand

Description

Plumbing fixtures, bathtub and shower fixtures, and indoor pipes constitutethis segment


Through 2018, worldwide demand for plumbing fixtures and fittings isprojected to advance over 6% annually to nearly $86 billion

Primary demand determinants are repair and remodel spending, new homeconstruction, and nonresidential improvement and repair

Domestic manufacturers are facing strong headwinds from cheap importswhich have increased from 69.9% of the market in 2008 to an estimated78.4% in 2013

0

5

10

15

20

25

30

35

40

1990 1996 2002 2008 2014

0

20

40

60

80

100

120

140

160

180

2012 2013 2014E 2015P 2016P 2017P


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12

AGGREGATES

ASPHALT

CEMENT AND CONCRETE



Description

Broad category of materials such as crushed rock, manufactured sand,natural sand, and gravel

Most-used material in the world, after water


On July 9th, Congress passed a bill to ease permitting for domestic mines,which included aggregates

Markets are local in nature due to high shipping costs

Major players include Lafarge, Cemex, CRH, Heidelberg Cement, MartinMarietta, Vulcan Materials and a large number of independent operators

Demand derived from total construction spending, which is based onglobal, national, regional and local economic conditions. 25 billion tons ofaggregates are used per year globally, roughly four tons per person

U.S. Aggregates Consumption (values in millions of metric tons)

Description

Paving and roofing materials include asphalt and tar-paving mixtures andblocks, shingles, roofing cements, and coatings


Asphalt is used over 85% of the time in U.S. highway and road construction

August 2015 combined federal and state highway and street spending isdown 0.4% from July 2015 and up 7.0% y-o-y

On July 15th, the U.S. House of Representatives passed an $8 billion short-term patch for the surface transportation programs through 12/31/15

MAP 21 regulations extend and fund federal highway programs, includingover $120 billion for infrastructure programs

Simultaneously, resurgent U.S. housing activity supports asphalt shingle androofing cement demand

U.S. Refinery Net Production of Asphalt and Road Oil

(thousands of barrels)

Description

Portland, natural, masonry, pozzolanic and other hydraulic cements

Typically, manufacturers also thermally treat and mine or quarry lime


Two of the industry’s largest players, Lafarge and Holcim, finalized theirmerger on July 10th

U.S. cement consumption has historically exceeded domestic productioncapacity

Concrete has been gaining share over asphalt since 2008

U.S. cement capacity and import terminals are largely owned orcontrolled by international producers

Significant barriers to entry exist for new cement capacity andtransportation costs lead to regional markets

U.S. Cement Consumption Outlook (millions of metric tons)

1,450 1,160 1,160 1,160 1,170 1,190 1,170

1,060

838 805 810 839 847 904

0

500

1,000

1,500

2,000

2,500

3,000

2008 2009 2010 2011 2012 2013 2014

Crushed Stone Sand/Gravel

0

4,000

8,000

12,000

16,000

20,000

0

20

40

60

80

100

120

2007 2009 2011 2013 2015

Government Residential Non-residential


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PUBLIC MARKETS



13

MEDIAN TEV / 2015 EBITDA

MEDIAN REVENUE GROWTH (2014 – 2015P)

MEDIAN EBITDA MARGIN (2013 – 2015P) MEDIAN EBITDA GROWTH (2014-2015P)

MEDIAN CAPEX / REVENUE (2015E)

MEDIAN REVENUE GROWTH (2011 – 2014)

HISTORICAL STOCK PRICES (OCTOBER 15TH, 2010 – OCTOBER 15TH, 2015)

HISTORICAL MEDIAN TEV / NTM EBITDA (OCTOBER 15TH, 2010 – OCTOBER 15TH, 2015)

7.3%

9.9%

8.7%

Construction Materials

Building Products Distributors

Building Products

6.1%

3.3%

6.2%



Building Products

14.3%

4.8%

12.8%



Building Products

1.7%

8.4%

13.6%



Building Products

5.8%

1.2%

2.7%



Building Products

8.9x

10.3x

11.0x



Building Products

6.0x

7.0x

8.0x

9.0x

10.0x

11.0x

12.0x

13.0x

Oct-10 Oct-11 Oct-12 Oct-13 Oct-14 Oct-15

Construction Materials Index Building Products Index

Building Products Distributors Index S&P 500 Index

(40%)

(20%)

0%

20%

40%

60%

80%

100%

120%

140%

Oct-10 Oct-11 Oct-12 Oct-13 Oct-14 Oct-15

Construction Materials Index Building Products Index

Building Products Distributors Index S&P 500 Index


PAGE |


PUBLIC COMPARABLES

14

BUILDING PRODUCTS



Stock Performance

Current % of 2014 TEV / EBITDA

Price LTM High Mkt Cap TEV Revenue EBITDA Margin 2015 2016

ASSA ABLOY AB $18.74 84.8% $20,816 $23,667 $7,265 $1,312 18.1% 15.7x 14.7x

Mohawk Industries Inc. 195.01 91.9% 14,414 17,747 7,803 1,161 14.9% 12.9x 11.0x

Masco Corporation 26.85 93.9% 9,235 11,331 8,521 1,003 11.8% 10.9x 9.8x

Fortune Brands Home & Security, Inc. 49.27 92.9% 7,880 9,049 4,014 498 12.4% 14.2x 11.8x

Lennox International, Inc. 125.05 98.2% 5,634 6,518 3,367 387 11.5% 14.4x 12.5x

Owens Corning 45.94 95.9% 5,401 7,378 5,276 717 13.6% 9.3x 8.3x

Kingspan Group plc 24.86 91.3% 4,395 4,938 2,289 229 10.0% 14.9x 13.0x

USG Corporation 25.93 78.9% 3,771 5,667 3,724 454 12.2% 9.7x 8.4x

Armstrong World Industries, Inc. 51.20 84.3% 2,832 3,666 2,515 313 12.5% 9.8x 8.8x

Masonite International Corporation 61.20 83.5% 1,856 2,213 1,838 117 6.3% 11.7x 9.2x

Interface Inc. 23.61 86.9% 1,555 1,742 1,004 113 11.3% 11.2x 9.6x

Trex Co. Inc. 40.57 70.3% 1,300 1,334 392 84 21.4% 13.5x 11.2x

American Woodmark Corp. 68.99 96.3% 1,122 954 807 57 7.0% 10.9x 9.5x

Nortek Inc. 61.84 66.5% 1,006 2,462 2,546 242 9.5% 8.4x 7.5x

Ply Gem Holdings, Inc 12.87 84.1% 875 1,895 1,567 119 7.6% 11.0x 8.2x

Continental Building Products, Inc. 18.34 75.8% 774 1,087 425 115 27.0% 8.1x 6.9x

NCI Building Systems Inc. 10.25 49.2% 759 1,166 1,383 69 5.0% 8.9x 7.2x

Tyman plc 4.30 81.2% 723 884 547 84 15.4% 9.5x 8.8x

Quanex Building Products Corporation 19.29 88.0% 654 719 597 45 7.5% 11.1x 7.5x

PGT, Inc. 13.14 81.4% 638 784 306 44 14.2% 10.9x 9.2x

Overall Median 84.6% 12.0% 11.0x 9.2x

Overall Mean 83.8% 12.5% 11.4x 9.7x

As of October 20, 2015 ($ in Millions, except per share amounts)


PAGE |


PUBLIC COMPARABLES

15

DISTRIBUTORS



Stock Performance



Wolseley plc $58.82 86.4% $14,936 $16,244 $20,129 $1,382 6.9% 10.3x 9.3x

HD Supply Holdings, Inc. 29.50 80.1% 5,690 10,800 9,097 856 9.4% 12.2x 11.0x

Beacon Roofing Supply, Inc. 34.21 92.2% 2,318 2,592 2,371 126 5.3% 14.6x 11.0x

Builders FirstSource, Inc. 12.58 75.4% 1,379 1,748 1,604 61 3.8% N/A N/A

Stock Building Supply Holdings, Inc. 17.36 68.9% 450 531 1,296 32 2.5% 11.1x 7.8x

Hardwoods Distribution Inc. 12.92 90.9% 221 259 389 22 5.7% 10.0x 8.9x

CanWel Building Materials Group Ltd. 4.19 83.7% 179 325 656 25 3.8% 12.1x 9.2x

Huttig Building Products Inc. 3.50 85.0% 85 161 642 14 2.1% NA NA

Bluelinx Holdings Inc. 0.72 53.3% 64 540 1,979 23 1.2% NA NA

Goodfellow Inc. 7.09 84.3% 61 106 390 12 3.1% NA NA

Taiga Building Products Ltd. 0.61 84.2% 19 236 1,104 35 3.1% NA NA


Overall Mean 80.4% 4.3% 11.7x 9.5x



PAGE |


PUBLIC COMPARABLES

16

CONSTRUCTION MATERIALS



Stock Performance



Aggregates and Cement

LafargeHolcim Ltd. $56.47 73.2% $34,236 $46,296 $19,238 $3,755 19.5% 7.3x 6.7x

CRH plc 27.59 85.9% 22,689 24,195 22,892 1,972 8.6% 9.6x 7.1x

HeidelbergCement AG 73.43 83.9% 13,410 21,759 15,281 2,472 16.2% 7.5x 6.7x

Vulcan Materials Company 88.31 86.0% 11,878 13,849 2,994 575 19.2% NA NA

Martin Marietta Materials, Inc. 145.99 81.7% 9,942 11,557 2,679 588 22.0% NA NA

CEMEX, S.A.B. de C.V. 0.76 75.3% 9,885 25,212 14,228 2,482 17.4% 8.9x 7.9x

Eagle Materials Inc. 65.82 69.4% 3,378 3,894 1,032 284 27.5% 10.1x 8.4x

Summit Materials, Inc. 20.50 70.7% 1,023 2,027 1,204 174 14.4% 7.5x 5.8x

Median 78.5% 18.3% 8.2x 6.9x

Mean 78.3% 18.1% 8.5x 7.1x

Heavy Construction Materials

James Hardie Industries plc $12.88 88.9% $5,733 $6,034 $1,622 $348 21.5% 14.0x 12.0x

Boral Limited 3.88 77.7% 2,882 3,465 3,643 338 9.3% 7.8x 7.4x

Headwaters Incorporated 19.75 90.8% 1,470 1,946 825 134 16.2% 11.4x 9.8x

U.S. Concrete, Inc. 52.80 91.7% 799 1,065 704 70 9.9% 9.3x 7.6x

Median 89.8% 20.7% 10.3x 7.4x

Mean 87.3% 14.2% 10.6x 9.2x

Lumber and Wood Products

Weyerhaeuser Co. $29.24 78.9% $14,984 $19,279 $7,693 $1,722 22.4% 13.2x 10.8x

West Fraser Timber Co. Ltd. 34.43 57.3% 2,935 3,230 3,330 497 14.9% 9.1x 5.5x

Louisiana-Pacific Corp. 17.04 91.4% 2,460 2,735 1,935 16 0.8% N/A 12.3x

Canfor Corp. 13.89 56.9% 1,865 2,285 2,891 442 15.3% 7.7x 4.5x

Norbord, Inc. 18.60 83.2% 1,579 2,326 1,198 89 7.4% N/A N/A

Universal Forest Products Inc. 71.67 98.7% 1,429 1,453 2,660 130 4.9% 8.5x 7.7x

Boise Cascade Company 27.54 62.7% 1,069 1,225 3,574 196 5.5% 7.7x 6.4x

Median 78.9% 7.4% 8.5x 7.0x

Mean 75.6% 14.0% 8.5x 7.9x


Overall Mean 79.2% 14.4% 9.3x 7.9x



PAGE |


M&A TRANSACTIONS

17



Announced

DateTarget Vertical Business Description Acquirer

10/8/2015 Wilkinson Construction

Company, Inc., Assets

Building Materials Select assets of Wilkinson Construction Company, Inc. including an

asphalt plant and aggregate extraction and processing property and

equipment were acquired by Geneva Rock Products, Inc.

Geneva Rock Products,

Inc.

10/5/2015 LaCantina Doors, Inc Building Products LaCantina Doors, Inc. designs and manufactures opening door systems. JELD-WEN, inc.

10/1/2015 Cretex Concrete Products

North, Inc.

Building Materials Cretex Concrete Products North, Inc. develops, manufactures, and

supplies various precast and prestressed products for the construction

industry in the midwest and north eastern U.S.

Hanson Pipe & Precast LLC

9/28/2015 The Wantage Stone Building Materials The Wantage Stone comprises a site development quarry including 80

acre land parcel and mining rights for additional 77 acres of land.

U.S. Concrete, Inc.

9/28/2015 GRABBER Construction

Products, Inc.

Building Products GRABBER Construction Products, Inc. manufactures and distributes

fasteners and fastening systems for wood, metal, and drywall

applications in the commercial and residential construction markets.

Svoboda Capital Partners

LLC; Dot Foods, Inc.

9/25/2015 CEMEX, Inc., Gypsum

Wallboard Business

Distribution CEMEX, Inc., Gypsum Wallboard Business primariliy distributes wallboard,

metal framing, and acoustical ceiling products in the Southeastern US.

US LBM Holdings, LLC

9/24/2015 Harvey Industries, Inc. Distribution, Building

Products

Harvey Industries, Inc. manufactures and distributes building products to

building industry professionals and homeowners in the United States.

Dunes Point Capital, LLC

9/23/2015 Graco Supply Company,

Inc.

Distribution Graco Supply Company, Inc. is engaged in the supply of adhesives,

sealants, coatings, lubricants, tapes, and MRO products to aircraft and

industrial markets.

CM Equity Partners

9/22/2015 GBS Building Supply Distribution GBS Building Supply supplies building and construction products through

six locations across the Carolinas.

US LBM Holdings, LLC

9/17/2015 Foundation Building

Materials, LLC

Distribution Foundation Building Materials, LLC, distributes a full range of building

products through 70 locations across the United States.

Lone Star Funds

9/17/2015 Gravel and Sand site in

Mankato

Building Materials Gravel and Sand site in Mankato comprises a gravel and sand

production property.

The City Of Mankato

9/15/2015 Norandex Building

Materials Distribution, Inc.

Distribution Norandex Building Materials Distribution, Inc. distributes roofing,

windows, decking, v inyl products, composites, shingles, siding, doors,

and a wide variety of building accessories.

American Builders &

Contractors Supply Co.,

Inc.

9/14/2015 Murray Supply Company,

LLC

Distribution Murray Supply Company, LLC, a wholesale distributor, supplies

commercial and residential plumbing products in North Carolina.

Morrison Supply Company,

LLC

9/10/2015 Karona, Inc. Building Products Karona, Inc. manufactures commercial and residential doors. JELD-WEN, inc.

9/2/2015 Skyline Group of

Companies

Building Products Skyline Group of Companies prov ide commercial and residential roofing

products for the residential and commercial builders, homeowners,

building owners, and property managers.

Thermal Systems KWC Ltd.

9/1/2015 Capitoline Products, Inc. Building Products Capitoline Products, Inc. manufactures post formed countertops, high

pressure laminate panels, finished high pressure laminate panel

component parts, and extended plywood.

VT Industries, Inc.

8/31/2015 Woodcraft Building Products Woodcraft, through its subsidiaries, manufactures and sells hardwood

cabinet doors, hardwood components, and engineered wood

products.

Quanex Building Products

Corporation

8/28/2015 E&A Materials, Inc., Select

Assets

Building Materials E&A Materials, Inc. mines and supplies construction aggregates. I t

offers concrete sand, masonry sand, fill sand, asphalt sand, rocks, gravel

and other specialty products.

U.S. Concrete, Inc.

8/27/2015 C.R. Laurence Co., Inc. Building Products C.R. Laurence Co., Inc. designs, engineers, manufactures, and supplies

architectural hardware for glazing, railing, architectural, construction,

industrial, food serv ice, and automotive industries worldwide.

Oldcastle

BuildingEnvelope, Inc.

8/20/2015 Robert Bowden, Inc. Building Products Robert Bowden, Inc. manufactures, assembles, sells, installs, and

serv ices various building materials for the construction professionals and

homebuilders in Georgia.

Building Materials Holding

Corporation


PAGE |


M&A TRANSACTIONS

18



Announced


8/19/2015 Superior Manufacturing

Group, Inc.

Building Products Superior Manufacturing Group, Inc. manufactures floor mat products. Checkers Industrial Safety

Products, Inc.

8/12/2015 Quest Construction

Products, LLC

Building Products Quest Construction Products, LLC manufactures protective systems and

coatings for the construction industry.

Building Materials

Corporation of America,

Inc.

8/11/2015 Lindab Inc. Building Products Lindab Inc. engages in the development, manufacture, and marketing

of sheet metal products for the heating, ventilation, and air conditioning

(HVAC) industry.

Ductmate Industries, Inc.

8/4/2015 Martin Marietta Materials,

Inc., California Cement

Business Assets

Building Materials Martin Marietta Materials, Inc., supplies aggregates products and

heavy building materials for the construction industry in the U.S. and

internationally.

CalPortland Company, Inc.

8/4/2015 Select Aggregate and

Ready-Mixed Concrete

Facilities

Building Materials Three Aggregates Facilities and Seven Ready-Mixed Concrete

Operations in Arizona and New Mexico were acquired by Vulcan

Materials Company.

Vulcan Materials Company

8/4/2015 Midwest Millwork, Inc. Building Products Midwest Millwork, Inc. manufactures cabinets, doors, millwork,

windows, hardware, plywood, framing lumber, and building materials.

Bliffert Lumber & Fuel

Company, Inc.

8/3/2015 Western Window Systems Building Products Western Window Systems designs and manufactures aluminum

windows, fixed operating windows, sliding glass doors, muti-slide doors,

casement hinged windows, and other window/door accessories.

PWP Growth Equity

8/3/2015 Alaska Industrial

Hardware, Inc.

Distribution Alaska Industrial Hardware, Inc. operates as a retailer and distributor of

hand and power tools, builder hardware, contractor and industrial

supplies, and maintenance and safety products in Alaska.

Bering Straits Native

Corporation

8/3/2015 MGM Industries,

Incorporated

Building Products MGM Industries, Incorporated produces custom PVC v inyl window and

door products for homeowners, builders, and remodelers.

Custom Window Systems,

Inc.

7/31/2015 Beatrice Concrete

Company, Inc.

Building Products Beatrice Concrete Company, Inc. produces sand, gravel, and crushed

rock.

NEBCO, Inc.

7/29/2015 Structus Building

Technologies, Inc.

Building Products Structus Building Technologies, Inc. designs and manufactures building

products for the drywall industry.

CertainTeed Gypsum, Inc.

7/29/2015 US LBM Holdings, LLC Distribution US LBM Holdings, LLC, through its subsidiaries, distributes building

materials in the Midwest, Northeast, Southeast, the Mid-Atlantic, and

Western United States.

Kelso & Company;

BlackEagle Partners, LLC

7/29/2015 Watts Water Technologies,

Inc., Select Assets

Building Products Select assets of Watts Water Technologies, Inc., including facilities

related to brass fittings, brass & tubular and v inyl tubing product lines for

homes.

Sioux Chief Manufacturing

Company, Inc.

7/27/2015 Roofing Supply Group, LLC Distribution Roofing Supply Group, LLC distributes and markets roofing materials and

related building products in the United States.

Beacon Roofing Supply,

Inc.

7/22/2015 Interline Brands Inc. Distribution Interline Brands, Inc., together with its subsidiaries, operates as a

distributor and direct marketer of broad-line maintenance, repair, and

operations products in the United States, Canada, and Central America.

The Home Depot, Inc.

7/21/2015 Madawaska Doors, Inc. Building Products Madawaska Doors, Inc. manufactures and markets wooden doors. Plaintree Systems Inc.

7/17/2015 House of Doors, Inc. Distribution House of Doors, Inc. supplies, installs, and serv ices commercial and

residential sectional doors, rolling steel doors, dock equipment, and

wood carriage house doors.

Material Handling Serv ices,

LLC

7/15/2015 Cali Bamboo, LLC Building Products Cali Bamboo, LLC manufactures green building products for residential

and commercial projects.

High Road Capital Partners

7/14/2015 Better Life Technology, LLC Building Products Better Life Technology, LLC manufactures and supplies roll-out garage

and concrete basement floor covers worldwide.

Century Park Capital

Partners

7/2/2015 BD Enterprises, Inc. Distribution BD Enterprises, Inc., doing business as Single Source Cabinet Supplies,

distributes and sells laminates, millwork, and cabinetry supplies.

Richelieu Hardware Ltd.


PAGE |


M&A TRANSACTIONS

19



Announced


7/2/2015 BD Enterprises, Inc. Distribution BD Enterprises, Inc., doing business as Single Source Cabinet Supplies,

distributes and sells laminates, millwork, and cabinetry supplies.

Richelieu Hardware Ltd.

7/1/2015 Jarv is Supply Company,

Inc.

Distribution Jarv is Supply Company, Inc. distributes industrial tooling to machine

shops in Colorado and beyond.

BlackHawk Industrial

Distribution, Inc.

6/30/2015 Advanced Flooring and

Design LLC

Building Products Advanced Flooring and Design LLC manufactures floor covering and

interior finish products to builders and homebuyers.

Interior Specialists, Inc.

6/24/2015 Golden State Window &

Door Design

Building Product

Distribution

Golden State Window & Door Design supplies doors, windows, molding,

and mantles to residential and commercial customers.

Golden State Lumber, Inc.

6/23/2015 C.H.I . Overhead Doors,

Inc.

Building Products C.H.I . Overhead Doors, Inc. manufactures residential, commercial,

rolling steel, and garage doors for residential and business applications.

KKR & Co. L.P

6/19/2015 Craft Equipment Company Distribution Craft Equipment Company distributes material handling, storage, and

waste reduction equipment in Alabama, Florida, Georgia, South

Carolina, and Tennessee.

Material Handling Serv ices,

LLC

6/17/2015 Anchor Block Company

and Anchor Wall Systems,

Inc.

Building Materials Anchor Block Company designs, manufactures, and sells concrete

landscape and masonry products.

Oldcastle Architectural,

Inc.

6/11/2015 Oldcastle Surfaces, Inc. Building Materials Oldcastle Surfaces, Inc. manufactures and markets countertops and

solid surfaces.

Seven Stone Surface

Fabrication, Inc.

6/10/2015 Kentec, Inc. Distribution Kentec, Inc. distributes commercial quality tools, pneumatic nailing and

stapling systems, foam insulation, and adhesives.

Southern Fastening Systems,

Inc.

6/8/2015 Rock Ridge Stone Inc. Building Materials Rock Ridge Stone Inc. quarries, manufactures, and distributes natural

stone products for outdoor applications in the residential and

commercial construction markets.

Salt Creek Capital I I , LLC

6/4/2015 A.H. Harris & Sons, Inc. Distribution A.H. Harris & Sons, Inc. distributes and sells construction supplies for

residential, commercial, industrial, and heavy and highway construction

markets.

Frontenac Company

6/3/2015 Stock Building Supply

Holdings, Inc.

Distribution Stock Building Supply Holdings, Inc., together with its subsidiaries,

distributes lumber and building materials in the United States.

Building Materials Holding

Corporation

6/3/2015 Insulation Fabricators, Inc. Building Products Insulation Fabricators, Inc. fabricates and distributes thermal and

acoustical insulation products for industrial and commercial markets.

Distribution International,

Inc.

6/2/2015 Mason Corporation Building Products Mason Corporation manufactures aluminum building products for the

residential and light commercial markets. I ts products include glass

enclosures, retractable doors, awnings, and patio covers.

Superior Metal Products

Co., Inc.

6/1/2015 ProCoat Systems, Inc. Distribution ProCoat Systems, Inc. supplies building materials to commercial and

residential construction projects in Colorado and surrounding areas.

Beacon Roofing Supply,

Inc.

6/1/2015 DuBROOK Concrete, Inc. Building Materials DuBROOK Concrete, Inc. manufactures and delivers ready-mixed

concrete in the northern Virginia market through its three ready-mixed

concrete batch plants and fleet of 42 mixer trucks.

U.S. Concrete, Inc.

5/31/2015 Thermo-Cell Industries

Limited

Building Products Thermo-Cell Industries Limited manufactures thermal and acoustical

cellulose insulation, specialty fibers, and hydroseeding mulches.

US GreenFiber, LLC

5/29/2015 The Wolf Organization, Inc. Distribution The Wolf Organization, Inc., through its subsidiaries, distributes kitchen

and bath cabinets, and specialty building products in the United States.

Quad-C Management, Inc.

5/27/2015 Advanced Building

Products, Inc.

Building Products Advanced Building Products, Inc. manufactures and installs aluminum

replacement and storm windows. I t also engages in distributing

residential exterior building materials such as siding, and roofing.

SRS Distribution, Inc.

5/22/2015 Colonial Concrete

Company, Inc.

Building Materials Colonial Concrete Company, Inc. produces ready-mix concrete and

offers products for footing applications, light weight mixes for elevated

slabs, flyash mixes, curbs and sidewalks, and color concrete.

U.S. Concrete, Inc.


PAGE |

REPRESENTATIVE BUILDING PRODUCTS & MATERIALS TRANSACTIONS




Select Atlanta,

Georgia aggregates

assets of LaFarge SA

have been acquired

by






has purchased

certain assets of










a subsidiary of


A Private Investor

Group

a subsidiary of



has sold certain assets to


















a division of

has completed a

recapitalization

with

have been acquired by

The Wichita, Kansas

aggregates, concrete,

asphalt, and paving

assets

of LaFarge SA







a division of



has been acquired byhas been acquired by


Strategic

Industries, LLC

Private Investors


a portfolio company ofa portfolio company of


portfolio companies of


Dyad Partnershas been acquired by





a portfolio company ofa portfolio company of


a division of



a subsidiary of



a division of






a division of





20


is being acquired by has been acquired by



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Energy, Power& Infrastructure

IndustrialsHealthcare & Life Sciences

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Services

Business Services

Building Products & Materials

Technology, Media & Telecom

Specialty Distribution

Consumer

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HARRIS WILLIAMS & CO.

22



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DISCLOSURES

SOURCES

Bloomberg

Building Design & Construction

Building-Products.com

Bureau of Economic Analysis

Eurostat

Freedonia

Global Industry Analysts

IBIS

New York Times

PNC Economic Outlook

S&P Capital IQ

S&P Leveraged Commentary & Data

The Wall Street Journal

Thomson Financial – SDC Database

Thomson Reuters

U.S. Census Bureau

Board of Governors of the FederalReserve System

The Federal Reserve Bank of St. Louis

The Conference Board

U.S. Department of Commerce:Census Bureau

McGraw Hill

National Association of Home Builders

Markit Economics

Investment News

U.S. Geological Survey

U.S. Energy Information Administration

PCA, Eagle Materials, and IBIS

Random Lengths

The Joint Center for Housing Studies ofHarvard University

National Gypsum Forecast andGypsum Association

BSRIA Market Intelligence

Remodeling Magazine


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