TM Capital Building Products Report...The wholesale Building Products sector continues to generate...

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TM Capital Building Products ReportC o n t i n u e d S e c t o r G r o w t h A t t r a c t i n g M & A A c t i v i t y

Industry Spotlight

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In November 2016, Consolidated Glass Holdings, a fabricator and distributor of architectural glass, metals and specialty products and a portfolio company of Grey Mountain Partners (“Grey Mountain”) acquired J.E. Berkowitz L.P. (“J.E. Berkowitz”). Based in Pedricktown, NJ, J.E. Berkowitz is a market leader in the fabrication of a full suite of glass products, including insulating, engineered, tempered and laminated glass, for a range of commercial buildings. The Company is a critical value-added glass fabricator providing premium products, coupled with design and project management services.

J.E. Berkowitz’s attractive and highly defensible profile coupled with favorable industry tailwinds garnered significant interest. TM Capital served as exclusive financial advisor to J.E. Berkowitz.

The combination of J.E. Berkowitz and Consolidated Glass Holdings establishes an industry leading company that can produce a wide range of products to serve multiple market segments. The transaction is yet another

example of a financial sponsor building upon an investment in the Building Products sector through additional strategic acquisitions to take advantage of what is expected to be an extended period of favorable industry trends.

Case Study: PE-Backed Strategic Investment Grey Mountain Partners-Backed Consolidated Glass Acquires J.E. Berkowitz

“We are honored to have the opportunity to partner with Arthur Berkowitz and the JEB employees, and to support the CGH team as they continue to grow the business.”

– Aditya Dabas, Senior Associate and Affiliate Manager with GreyMountain Partners

“As the U.S. housing market continues its recovery, we believe now is the ideal time to position Builders FirstSource for its next phase of growth and value creation. Together we will establish a broader, more efficient platform of manufacturing and distribution capabilities, supported by high-quality service from the best talent in the industry.”

– Floyd Sherman, Chief Executive Officer of Builders FirstSource

has been acquired by

The undersigned served as financial advisor to J.E. Berkowitz, L.P. in connection with this transaction.

a portfolio company of

In February 2017, Midwest Wholesale Hardware (“Midwest”), an investment holding of Olympus Partners and premier, value-added national distributor of commercial and institutional door hardware, electronic access controls and security products, was acquired by High Road Capital Partners, a private equity firm focused on middle market transactions. TM Capital served as exclusive financial advisor to Midwest.

Midwest, based in Kansas City, Missouri, offers the industry’s largest next-day fulfillment platform and operates distribution centers in California, Florida, Pennsylvania, South Carolina and Texas. The Company provides expert customer service and offers an extensive inventory of all major brands and hard-to-find components for maintenance and repair applications within the commercial and institutional door hardware market. Management and High Road plan to accelerate the Company’s growth by expanding its distribution coverage, investing in innovative technology solutions and pursuing strategic acquisitions.

Case Study: Financial Sponsor InvestmentHigh Road Capital Partners Acquires Midwest Wholesale Hardware

“We are excited to partner with Midwest Wholesale Hardware and…build upon the Company’s position as the premier after-market distributor of commercial door products. We look forward to supporting Midwest’s efforts to expand its geographic presence and capitalize on growth within the electronic access control market.”

– Ben Schnakenberg, Partner, High Road Capital Partners

an investment holding of

The undersigned served as financial advisor to Midwest Wholesale Hardware in connection with this transaction.

has been acquired by

Building Products Industry Spotlight Market Demand Drivers

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Overview

As strong tailwinds in the residential and non-residential construction markets endure, both strategic and

financial investors remain highly acquisitive in the Building Products sector. A recovery in the U.S. housing

market has spurred an increase in Building Products M&A transactions in recent months – in 2016, there

were 295 reported Building Products M&A transactions in the U.S. and Canada (see figure 8, page 3). In

addition to continued sector growth, there are several supplemental factors that should spur sector

expansion and consolidation: (1) Single-family housing starts remain well below pre-recession levels,

indicating a favorable outlook for continued growth in coming years; (2) Aging commercial building stock

represents a sustainable addressable market for renovation and reuse projects; and (3) Macroeconomic

trends, including historically low interest rates, low gas prices, rising income and low unemployment all

contribute to increased home improvement spend. Corporate balance sheets continue to hold record

amounts of capital enabling them to focus on consolidation and geographic expansion and financial

sponsors continue to have significant dry powder, aligning forces for a strong M&A activity outlook.

Macroeconomic Factors Providing Robust Industry Tailwinds

Non-Residential Construction Spending

Investment interest in Building Products manufacturers and distributors typically ebbs and flows with end

market construction cycles. Dodge Data & Analytics predicts 6% construction growth in 2016, with the value

of construction starts reaching $712 billion. Growth in the construction industry will continue to be led by

privately financed projects, bolstered by robust commercial construction – the value of private non-

residential construction is projected to increase at a 2.1% 5-year CAGR to $488.1 billion in 2021 (see figure

1). With 81.6% of commercial buildings in the U.S. having been built prior to 2000, a substantial addressable

market exists for renovation projects that will drive commercial construction in the near future (see figure

2). Furthermore, the Architectural Billings Index, a leading indicator for non-residential construction activity

has been greater than 50 in 40 of 47 months since January 2013, indicating an increased level of interest

in new building construction (see figure 3).

Figure 3: Architectural Billings Index

Figure 2: Current Commercial Buildings by Year Constructed (% of Total Buildings and % Floorspace)

Figure 1: Non-Residential Building Construction

30

35

40

45

50

55

60

Source: American Institute of Architects

$414 $421$452

$509$540

$438

$366 $375

$423 $429

$473$452 $441 $447 $458 $467 $478 $488

$300

$400

$500

$600

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016E2017P2018P2019P2020P2021P

($ in billions)

Source: IBISWorld

15%

11% 11%12%

16%15%

13%

5%

11%

8%

12% 12%

17%16% 16%

7%

—

5.0%

10.0%

15.0%

20.0%

Before 1946

1946to

1959

1960to

1969

1970to

1979

1980to

1989

1990to

1999

2000to

2007

2008to

2012

Year ConstructedPercent of Total Buildings Percent of Total Floorspace

Source: U.S. Energy Information Administration

Building Products Industry Spotlight Market Demand Drivers

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Residential Construction Spending & Housing Starts

Historically low mortgage rates and favorable demographic trends – including increased consumer

confidence and low unemployment – are propelling continued growth in the residential construction market.

The National Association of Home Builders (“NAHB”) forecasts single-family production to expand by more

than 10% in 2016 – builder confidence in the market for newly built single-family homes in December 2016

was at its highest level since 2005. New housing starts have grown consistently since 2009; 1.1 million new

privately owned housing units started in 2016, representing a 10% 5-year CAGR. Despite decreasing

multifamily housing starts, single-family housing starts have yet to reach the levels recorded in the prior

decade. New household formations (“HF”) are a critical indicator in the housing market and explain some

of the slow recovery in single-family starts. Even though HF figures have tripled since the 2008-2009 period,

the ratio of Housing Units Started per HF remains below its 35-year historical average of 1.3 and has been

so for five of the past six years (see figures 4 & 5).

Figure 4: U.S. Housing Units Started

Figure 5: U.S. Household Formations and Housing Starts per Household Formation

Sources: U.S. Census Bureau (Figure 4); National Association of Home Builders & U.S. Census Bureau (Figure 5)

Figure 7: LIRA U.S. Remodeling Activity

Source: Joint Center for Housing Studies at Harvard University

Figure 6: U.S. Home Improvements Spending

Source: IBISWorld

Increasing home prices and greater sales of existing homes support demand for renovations; improved

consumer confidence (a result of rising incomes, lower unemployment and home equity appreciation) will

spur increasing levels of discretionary spending, including on big-ticket items such as home renovations.

IBISWorld forecasts home improvement spending in the United States to increase at a 2.9% CAGR to $188

billion by 2021 (see figure 6). Furthermore, the LIRA remodeling activity, a leading indicator of strong

demand for building products in the U.S., projects the value of homeowner improvements and repairs to

increase from $304 billion in Q3 2016 to $327 billion by Q3 2017, (see figure 7).

$286 $291 $297 $304 $305 $313 $322 $327

$200

$250

$300

$350

Q4 Q1 Q2 Q3 Q4P Q1P Q2P Q3P

2015 2016 2017

Hom

eow

ner

Impro

vem

ents

&

Repair

s

($ in billions)

$163 $169 $174 $180 $185 $188

—

$50

$100

$150

$200

2016E 2017P 2018P 2019P 2020P 2021P

($ in billions)

1,956 2,0691,801

1,355906

554 587 609 784 928 1,001 1,108 1,143 1,258 1,365

―

750

1,500

2,250

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016E 2017P 2018P

Single-family Multifamily

(in thousands)

722

1,3431,041

1,627

772

398 357

2,389

1,1571,375

770

1,358 1,232

—

1.0

2.0

3.0

4.0

―

1,000

2,000

3,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Sta

rts P

er

Household

F

orm

ation

Household

F

orm

ations

(Thousands)

Household Formations Housing Starts per Formation 35-Year Avg. (Housing Starts per Formation)

Building Products Industry Spotlight M&A Activity

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Trends in Building Products M&A Activity

Both strategic and financial acquirers are capitalizing on favorable macroeconomic trends and strong

industry tailwinds in the construction and housing sectors. Consolidation continues to permeate the

fragmented Building Products space, as evidenced by the 295 reported M&A transactions announced and

executed in 2016 in the U.S. and Canada. Recent M&A activity within the Building Product sector has been

characterized by many of the following trends: (1) Product-oriented Building Products companies are

seeking to expand and penetrate into service categories; (2) Distributors are aggressively converging to

create a one-stop Building Products solution; (3) Large, mature companies are seeking to make targeted

acquisitions outside of their core product offerings; (4) Technological innovations are blurring the lines

between commercial and residential product applications; and (5) Private equity firms with significant dry

power are pursuing platform acquisitions in the Building Products space in order to establish a presence in

the sector upon which to grow organically and through add-on acquisitions.

Figure 8: U.S. and Canada Building Products M&A Announced Deal Volume

Figure 9: U.S. and Canada Building Products M&A Disclosed Deal Volume (Dollar Amount)

Product-Oriented Building Products Companies Seek to Expand or Acquire Service Capabilities

There is an increasing trend among Building Products manufacturers and distributors to expand service

capabilities, with the goal of becoming a one-stop-shop for customers. Building Products manufacturers

and distributors are equipped with specialized product expertise, making the addition of service capabilities

a logical adjacency. Furthermore, exposure to installation and renovation services allows Building Products

manufacturers to become more innovative in new product development by understanding firsthand the

needs of the customers they serve and the performance of the products they sell. Building Products

manufacturers are increasingly seeking add-on acquisitions of established service companies as a means

of expanding their capabilities to accelerate growth. For example, Atlas Copco, a provider of sustainable

productivity solutions including compressors, vacuum solutions, air treatment systems and construction

equipment, recently acquired three companies with service capabilities – Vacuum Solutions, Air Repair

Sales & Services and Air Supply Systems, Inc. – in an effort to service the equipment they sell to

customers. Further supporting this trend, US LBM, the third largest specialty building materials distributor

in the U.S. recently acquired Raymond Building Supply, a provider of lumber, garage doors, windows,

cabinets, appliances and installation services.

253186 152 171 207

278 322 310256

183278 259 267 221 261 243 262

33

2132 35

55

7175 72

44

28

33 45 5744

39 50 33

286

207 184 206262

349397 382

300

211

311 304 324265

300 293 295

―

100

200

300

400

500

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Strategic Buyer Financial BuyerSource: Capital IQ

$27.0

$16.7$13.0 $10.0

$19.5

$42.4

$30.3 $32.3

$3.9 $6.9$10.8 $8.8

$25.3

$13.1$18.5 $17.0

$28.3

—

$10.0

$20.0

$30.0

$40.0

$50.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Strategic Buyer Financial BuyerSource: Capital IQ

($ in billions)


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Aggressive Consolidation by Building Products Distributors Deepening Existing Platforms

The wholesale Building Products sector continues to generate enormous M&A activity, with most

transactions involving large distributors acquiring smaller targets. There is an increasing need for Building

Products wholesalers to become a one-stop solution as customers seek to buy a wider variety of products

from a smaller number of highly reliable suppliers. Among the most active companies in the space, SRS

Distribution and Beacon Roofing Supply, distributors of roofing materials and exterior building products,

completed six and five acquisitions in 2016, respectively.

Expansion into Product Adjacencies

Large Building Products companies are increasingly seeking and acquiring businesses outside of their core

offering – as competition intensifies in the fragmented Building Products space, acquisition activity is likely

to continue as companies seek to add adjacent product lines. The steep learning curve required to enter

new product areas results in companies leveraging strong and proven platforms to break into new product

areas through strategic acquisitions. Furthermore, expansion of products and service capabilities allows

companies to diversify their construction cycle risk. As evidence of this trend, ABC Supply, the largest

wholesale distributor of roofing in the U.S., closed five deals in 2016, including the acquisition of L&W

Supply, a distributor of drywall and ceiling tiles, enabling the Company to expand its capabilities to the

interiors of buildings.

Smart Technology in the Building Products Sector

The development of “smart” technology is transforming the Building Products sector. Manufacturers

understand the importance of making their products “smart”, enabling end users to control usage, resulting

in cost savings and the ability for products to “talk” to each other. Smart technology is also influencing the

activities of Building Products distributors who receive higher margins for distributing technologically

advanced building products, including advanced access security products and smart HVAC systems. As

technology advances and traditional manufactured building products continue to incorporate software,

controls and connectivity, companies operating in the Building Products space will need to adapt to the new

technology, paving the way for potential M&A activity. In July 2016, Acuity Brands (“Acuity”), a provider of

lighting solutions and services, acquired DG Logic, a provider of innovative software solutions that enable

the “Internet of Things”, in order to support the Company’s efforts to provide “customers with solutions that

will allow them to easily interact with various sets of data from various devices”, according to Acuity

President Vernon Nagel1.

Consolidation Strategy Backed by Institutional Capital Taking Flight

Building Products manufacturers, distributors and service providers have recently gained interest from

financial sponsors with significant dry powder that are aggressively pursuing add-on acquisitions in the

Building Products space in order to increase their presence in the sector. Of the 295 U.S. and Canadian

M&A transactions in 2016, 33 directly involved a financial buyer. Notably, Oncap acquired Tecta America,

the largest provider of commercial roofing services in the United States, for $280 million. Although the direct

number of private equity investments has yet to recover to pre-recession levels, private equity firms are

building upon investments in the Building Products sector through additional tuck-in acquisitions. Since

being acquired by Kelso & Company in August 2015, US LBM Holdings has acquired ten Building

Products companies. Distribution International, a supplier of mechanical and industrial insulation,

fabrication, refractory and HVAC products, has acquired five Building Products companies since being

acquired by Advent International in December 2014. Similarly, Consolidated Glass, a portfolio company

of Grey Mountain Partners, acquired J.E. Berkowitz, a high-quality architectural glass fabricator, in early

November 2016.

1 GlobeNewswire – Acuity Brands Press Release


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The charts below illustrate trends in the TEV/EBITDA multiples of disclosed M&A transactions and further

break down M&A activity in the Building Products industry by sub-sector. In 2016, the median disclosed

TEV/EBITDA multiple for a transaction in the Building Products industry was approximately 10x and the

average disclosed deal size was $372 million. The most active sub-sectors within the Building Products

industry for M&A activity in 2016 were Surfaces & Materials manufacturers and Building Products

distributors, which disclosed 83 and 88 transactions in 2016, respectively.

Figure 10: U.S. and Canada Building Products Disclosed M&A Median TEV/EBITDA Multiples / Avg. Deal Size

Figure 11: U.S. and Canada Windows, Doors & Cabinetry Disclosed M&A Volume / Avg. Deal Size

Figure 12: U.S. and Canada HVAC & Lighting Disclosed M&A Volume / Avg. Deal Size

16 19 1520

2732

46

35

23 22

28

2531

23 2427

18

—

$100

$200

$300

$400

$500

―

25

50

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Avg. D

isclo

sed D

eal S

ize

To

tal D

isclo

sed

Tra

nsactio

ns

Total Deal Volume Average Deal SizeSource: Capital IQ

($ in millions)

77

49 54 52

66

8074

89

6959 60

66 6757

63 6254

—

$250

$500

$750

$1,000

―

25

50

75

100

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Avg. D

isclo

sed D

eal S

ize

To

tal D

isclo

se

d

Tra

nsactio

ns


($ in millions)

7.6x 9.0x

6.4x 7.4x

8.8x

9.0x

8.2x 9.4x

12.2x

6.9x 8.1x 7.5x

9.4x 8.6x

11.6x 9.9x

9.9x

—

$100

$200

$300

$400

$500

—

5.0x

10.0x

15.0x

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Avg. D

isclo

sed D

eal S

ize

Media

n D

isclo

sed

TE

V/E

BIT

DA

Multip

le

Median TEV/EBITDA Multiple Average Deal SizeSource: Capital IQ

($ in millions)


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Figure 13: U.S. and Canada Plumbing & Hardware Disclosed M&A Volume / Avg. Deal Size

Figure 14: U.S. and Canada Surfaces & Materials Disclosed M&A Volume / Avg. Deal Size

Figure 15: U.S. and Canada Building Products Distributors Disclosed M&A Volume / Avg. Deal Size

Figure 16: U.S. and Canada Roofing, Siding & Insulation Disclosed M&A Volume / Avg. Deal Size

1317

13

2116

1924 24

13 1115 16 16

22

1210

17

—

$200

$400

$600

$800

―

25

50

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Avg. D

isclo

sed D

eal S

ize

Tota

l D

isclo

sed

Tra

nsa

ctio

ns


($ in millions)

100

6149 52 59

101128 125

88

57

9987

7567

8473

83

—

$400

$800

$1,200

―

50

100

150

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Avg

. D

isclo

se

d D

ea

l S

ize

To

tal D

isclo

sed

Tra

nsactio

ns


($ in millions)

24

17 16

2723

35

47

3125 24

28 27 2823 22 23 23

—

$200

$400

$600

$800

$1,000

$1,200

―

25

50

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Avg

. D

isclo

se

d D

ea

l S

ize

To

tal D

isclo

se

d

Tra

nsactio

ns


($ in millions)

68

3628

46

6374

83 85

60

47

77 8188

76 8189 88

—

$200

$400

$600

―

25

50

75

100

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Avg. D

isclo

sed D

eal S

ize

To

tal D

isclo

sed

Tra

nsactio

ns


($ in millions)


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Strategic Consolidation – The following charts show a select group of Building Products consolidators

that have been acquisitive within the sector over the past several years.

Windows, Doors & Cabinetry

Core Brand /

AcquirerAcquired Brands / Companies (Year Acquired)

2013 2013

2014

2015 2014

20152015 201420152015 2015

2014

Windows segment

2013

20152016 2015

2016

2015

20162016

2016

2015

28 Transactions

Since 2012

7 Transactions Since

2012


2012


2012


2012 2014

2016 2015 2015 2015

2015 2015 2014

HVAC & Lighting

Core Brand /


2014 2014

Home & Life Solutions and Global

AC Segment

2016 2014

2013

Assets of

20162016

2016

2016


2012 2015

12 Transactions

Since 2012 2016 2016 2016 2015 2015

13 Transactions

Since 2012 2014 2014

201523 Transactions

Since 2012


- 8 -

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Plumbing & Hardware

Core Brand /


2013 20122014

2015

2015 2014 2014 2013

2014 2012

2016

2013

2015

2015 2013

2016


2012

10 Transactions

Since 2012


2012


2012

Surfaces

Core Brand /


2013 20132014

20122014201420142015

2014 20132014

20152015

2015

201520152015


2012


2012


2012

2016 2015

201510 Transactions

Since 2012


- 9 -

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Distributors

Core Brand /


2015 2015 2014 2014 2014

2015 2015 2013

2015 2014Assets of

2015

2015

2015

20162016

2016

2016

2016 2015

20162016

2015

Oregon Roofers

Supply, Inc.

20152015201520152015

Rooftek Roofing

Supplies, Inc.

2015

T&C Supply,

Inc.

2016201620162016

2016

2016 2016

2016

35 Transactions

Since 2012

19 Transactions

Since 2012


2012


2012


2012

35 Transactions

Since 2012

36 Transactions

Since 2012

2016 2016

2016 2015

Guilford

Builders

Supply Co.

2016

20152016

2016

Seifer

Distributors,

Inc.

2016

2015 2015

2015 2015 2015 2015

2016 2016 2016

2016 2016 2016 2016

2015 2015

Building Products Industry Spotlight Valuation Considerations

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Valuation Considerations

The charts below illustrate the valuation metrics and stock performance of the Building Products industry

by major sub-segment. In general, consumer-facing companies with strong brand names trade at a

premium to more commoditized companies that rely heavily on raw material inputs (e.g. roofing, siding and

insulation). Since the last report, the overall industry has seen an expansion in TEV / EBITDA multiples,

with companies realizing significant sales and earnings growth and buyers willing to pay higher premiums

to capture industry tailwinds. Forward multiples suggest that investors expect an acceleration of the housing

market rebound as well as EBITDA growth, particularly in the Windows, Doors & Cabinetry and Materials

sub-segments. The stock performance of all of the sectors across the Building Products categories have

outpaced the S&P 500 over the past five years, with the exception of the Roofing, Siding and Insulation

category.

Figure 17: Guideline Public Company TEV / EBITDA Multiples

Figure 18: Historical TEV / EBITDA Multiples

Figure 19: 5-Year Stock Performance

10.7x

12.0x 11.8x

10.3x9.2x

10.2x

11.7x10.7x

10.1x

11.5x 11.7x

9.2x8.8x

9.0x

11.9x

10.1x

8.5x

11.0x11.4x

8.4x7.7x

8.4x

10.4x

8.5x

0.0x

5.0x

10.0x

15.0x

Windows,Doors &

Cabinetry

Plumbing &Hardware

HVAC &Lighting

Surfaces Roofing,Siding &Insulation

Materials Distributors TM CapitalBuildingProducts

Index

2016E 2017PLTM 2016E 2017PLTM 2016E 2017PLTM 2016E 2017PLTM 2016E 2017PLTM 2016E 2017PLTM 2016E 2017PLTM 2016E 2017PLTM

Source: Capital IQ

—

4.0x

8.0x

12.0x

16.0x

20.0x

Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16

Windows, Doors &Cabinetry

Plumbing &Hardware

Distributors

S&P 500

HVAC & Lighting

Materials

Surfaces

Roofing, Siding &InsulationSource: Capital IQ

(25%)

25%

75%

125%

175%

225%

Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16

Windows, Doors &Cabinetry

Surfaces

Plumbing &Hardware

Distributors

Materials

S&P 500

HVAC & Lighting

Roofing, Siding &InsulationSource: Capital IQ

Building Products Industry Spotlight Valuation Considerations

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Recession Impact and Recovery

The charts below illustrate the impact of the Great Recession on the Building Products industry and

the sector’s recovery compared to pre-recession levels. The ability to recover from the recession is

measured by comparing each company’s expected 2016 EBITDA and revenue growth since its 2008,

pre-recession, level. Companies in the Windows, Doors & Cabinetry and HVAC & Lighting sub-

segments have displayed particularly strong sales and earnings performance compared to pre -

recession levels, fueled by a recovery in building construction and home improvement spending in

recent years.

Figure 21: Recession Impact and Recovery – Building Products Distributors / Retailers

Figure 20: Recession Impact and Recovery – Building Products Manufacturers

NA

166%

42%

NA15%

114%

48%

182%

240%

5% —

137%

(32%)

5% 22%

44%

14% 38%

150%

(3%)

(100%)

—

100%

200%

300%

BuildersFirstSource

BeaconRoofingSupply

Bluelinx Huttig Lowe's PoolCorporation

The HomeDepot

UniversalForest

Products

Watsco Wolseley

2008 to 2016E EBITDA Growth 2008 to 2016E Revenue Growth

537%

Source: Capital IQ

156%

68%

97%

60% 55%

102%

14%

139%

45% 39%

150%

95%105%

33%

63% 60%

(22%)

69%

40% 31%

11%

(5%)

29%

(4%)

(50%)

—

50%

100%

150%

200%

ASSAABLOY

FortuneBrands

AcuityBrands

Daikin Masco Tyman The DixieGroup

Mohawk Apogee PPG Carlisle OwensCorning

2008 to 2016E EBITDA Growth 2008 to 2016E Revenue Growth

Windows, Doors &

Cabinetry

HVAC &Lighting

Plumbing & Hardware

Surfaces MaterialsRoofing,Siding &

Insulation

Building Products Industry Spotlight Appendix

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Appendix

($ in millions)

Enterprise Revenue EBITDA Enterprise Value / EBITDA Revenue Growth EBITDA Margins

Company Value LTM 2016E 2017P LTM 2016E 2017P LTM 2016E 2017P 5 yr. CAGR 2016E LTM 2016E

American Woodmark Corporation $966 $982 $941 $1,019 $116 $109 $123 8.4x 8.9x 7.9x 15.8% 14.0% 11.8% 11.5%

ASSA ABLOY AB 23,453 7,931 8,077 8,684 1,456 1,455 1,613 16.1 16.1 14.5 11.3% 4.8% 18.4% 18.0%

Fortune Brands Home & Security, Inc. 9,891 4,908 5,002 5,398 753 780 896 13.1 12.7 11.0 8.5% 9.2% 15.3% 15.6%

Masco Corporation 12,478 7,313 7,353 7,698 1,195 1,231 1,341 10.4 10.1 9.3 0.5% 2.9% 16.3% 16.7%

Masonite International Corporation 2,398 1,978 1,979 2,096 225 251 289 10.7 9.6 8.3 5.8% 5.7% 11.4% 12.7%

PGT Innovations, Inc. 793 442 459 503 69 77 94 11.6 10.3 8.5 22.4% 17.9% 15.5% 16.8%

Ply Gem Holdings, Inc 1,973 1,880 1,891 2,010 227 227 256 8.7 8.7 7.7 12.8% 2.8% 12.1% 12.0%

Median $2,398 $1,978 $1,979 $2,096 $227 $251 $289 10.7x 10.1x 8.5x 11.3% 5.7% 15.3% 15.6%

Mean 7,422 3,633 3,672 3,915 577 590 659 11.3 10.9 9.6 11.0% 8.2% 14.4% 14.8%

($ in millions)



ASSA ABLOY AB $23,453 $7,931 $8,077 $8,684 $1,456 $1,455 $1,613 16.1x 16.1x 14.5x 11.3% 4.8% 18.4% 18.0%

Fortune Brands Home & Security, Inc. 9,891 4,908 5,002 5,398 753 780 896 13.1 12.7 11.0 8.5% 9.2% 15.3% 15.6%

Ingersoll-Rand Plc 22,891 13,476 13,494 13,761 1,937 1,966 2,075 11.8 11.6 11.0 1.1% 1.5% 14.4% 14.6%

Masco Corporation 12,478 7,313 7,353 7,698 1,195 1,231 1,341 10.4 10.1 9.3 0.5% 2.9% 16.3% 16.7%

Mueller Water Products, Inc. 2,428 1,139 1,161 927 188 202 191 12.9 12.0 12.7 3.8% (0.3%) 16.5% 17.4%

Newell Brands Inc. 34,538 10,689 13,404 15,135 1,781 2,406 2,850 19.4 14.4 12.1 19.5% 126.6% 16.7% 17.9%

Rexnord Corporation 3,850 1,916 1,924 1,910 309 360 347 12.5 10.7 11.1 2.8% (6.2%) 16.1% 18.7%

Richelieu Hardware Ltd. 1,159 641 643 684 72 71 79 16.2 16.3 14.6 10.1% 13.0% 11.2% 11.1%

Spectrum Brands Holdings, Inc. 10,643 5,040 5,121 5,139 896 954 996 11.9 11.2 10.7 10.0% 9.2% 17.8% 18.6%

Stanley Black & Decker, Inc. 21,799 11,332 11,416 11,930 1,881 1,812 1,992 11.6 12.0 10.9 4.0% 2.2% 16.6% 15.9%

Toto Ltd. 6,265 4,953 5,082 5,095 567 573 611 11.0 10.9 10.3 5.9% 5.8% 11.5% 11.3%

Tyman plc 794 474 563 641 72 93 107 11.0 8.5 7.4 15.8% 27.3% 15.3% 16.6%

Villeroy & Boch AG 410 882 895 924 70 79 85 5.9 5.2 4.8 2.3% 3.5% 7.9% 8.8%

Watts Water Technologies, Inc. 2,435 1,415 1,403 1,476 202 213 230 12.0 11.5 10.6 (0.1%) (4.4%) 14.3% 15.2%

Median $8,078 $4,930 $5,042 $5,117 $660 $676 $753 12.0x 11.5x 11.0x 4.9% 4.2% 15.7% 16.2%

Mean 10,931 5,151 5,396 5,672 813 871 958 12.6 11.7 10.8 6.8% 13.9% 14.9% 15.5%

($ in millions)



Acuity Brands, Inc. $9,048 $3,406 $3,312 $3,630 $586 $610 $684 15.4x 14.8x 13.2x 13.0% 22.4% 17.2% 18.4%

Daikin Industries,Ltd. 31,470 17,727 18,202 18,115 2,794 2,533 2,681 11.3 12.4 11.7 12.2% 7.8% 15.8% 13.9%

Eaton Corporation plc 38,383 19,937 19,785 19,742 3,267 3,269 3,365 11.7 11.7 11.4 4.3% (5.1%) 16.4% 16.5%

Ingersoll-Rand Plc 22,891 13,476 13,494 13,761 1,937 1,966 2,075 11.8 11.6 11.0 1.1% 1.5% 14.4% 14.6%

Johnson Controls International plc 57,339 37,674 37,545 30,094 3,510 4,589 4,812 16.3 12.5 11.9 (1.7%) 1.0% 9.3% 12.2%

Koninklijke Philips N.V. 32,136 26,364 26,434 27,338 3,390 3,600 3,963 9.5 8.9 8.1 3.2% 1.4% 12.9% 13.6%

Lennox International Inc. 7,512 3,579 3,629 3,793 494 524 588 15.2 14.3 12.8 5.0% 4.6% 13.8% 14.4%

Schneider Electric S.E. 48,689 27,571 26,586 27,188 4,049 4,213 4,529 12.0 11.6 10.7 2.0% (7.2%) 14.7% 15.8%

United Technologies Corporation 108,305 56,885 57,307 58,795 10,155 10,823 10,676 10.7 10.0 10.1 0.6% 2.2% 17.9% 18.9%

Median $32,136 $19,937 $19,785 $19,742 $3,267 $3,269 $3,365 11.8x 11.7x 11.4x 3.2% 1.5% 14.7% 14.6%

Mean 39,530 22,958 22,922 22,495 3,354 3,570 3,708 12.7 12.0 11.2 4.4% 3.2% 14.7% 15.4%

($ in millions)



Armstrong World Industries, Inc. $2,915 $2,423 $1,239 $1,276 $291 $318 $339 10.0x 9.2x 8.6x (14.6%) (48.8%) 12.0% 25.7%

Caesarstone Ltd. 947 531 530 560 127 127 138 7.5 7.4 6.9 15.3% 6.1% 23.9% 24.0%

Headwaters Incorporated 2,443 975 986 1,192 173 190 244 14.1 12.9 10.0 10.9% 10.2% 17.8% 19.3%

Interface, Inc. 1,277 966 968 996 136 133 152 9.4 9.6 8.4 0.3% (3.4%) 14.1% 13.8%

Internacional de Cerámica, S.A.B. de C.V. 423 422 NA NA 69 NA NA 6.1 NA NA NA NA 16.3% NA

Louisiana-Pacific Corporation 2,971 2,146 2,219 2,489 262 337 459 11.4 8.8 6.5 10.8% 17.2% 12.2% 15.2%

Mohawk Industries, Inc. 18,173 8,775 8,923 9,338 1,699 1,708 1,817 10.7 10.6 10.0 9.6% 10.5% 19.4% 19.1%

Panariagroup Industrie Ceramiche S.p.A. 267 402 416 435 36 43 50 7.5 6.1 5.4 5.7% 11.2% 8.8% 10.5%

Tarkett S.A. 3,102 2,945 2,931 3,063 301 346 376 10.3 9.0 8.3 5.5% 0.4% 10.2% 11.8%

The Dixie Group, Inc. 176 403 395 395 17 NA NA 10.3 NA NA 7.9% (6.5%) 4.2% NA

Trex Company, Inc. 2,083 473 477 517 112 125 142 18.5 16.7 14.7 12.3% 8.3% 23.7% 26.2%

Median $2,083 $966 $977 $1,094 $136 $190 $244 10.3x 9.2x 8.4x 8.8% 7.2% 14.1% 19.1%

Mean 3,161 1,860 1,908 2,026 293 370 413 10.5 10.0 8.7 6.4% 0.5% 14.8% 18.4%

Source: Capital IQ. As of Dec. 31, 2016

Selected Public Companies – Windows, Doors & Cabinetry

Selected Public Companies – Plumbing & Hardware

Selected Public Companies – HVAC & Lighting

Selected Public Companies – Surfaces


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Appendix

($ in millions)



Carlisle Companies Incorporated $7,160 $3,658 $3,690 $3,867 $740 $737 $763 9.7x 9.7x 9.4x 8.2% 4.2% 20.2% 20.0%

Compagnie de Saint-Gobain S.A. 35,411 42,276 42,014 43,691 4,267 4,277 4,655 8.3 8.3 7.6 (1.5%) (1.4%) 10.1% 10.2%

James Hardie Industries plc 7,386 1,823 1,726 1,901 455 433 468 16.2 17.1 15.8 8.1% 4.2% 24.9% 25.1%


Owens Corning 8,256 5,591 5,603 5,772 1,041 1,044 1,077 7.9 7.9 7.7 1.0% 4.7% 18.6% 18.6%

Ply Gem Holdings, Inc 1,973 1,880 1,891 2,010 227 227 256 8.7 8.7 7.7 12.8% 2.8% 12.1% 12.0%

Median $7,273 $2,902 $2,954 $3,178 $597 $585 $615 9.2x 8.8x 7.7x 8.2% 4.2% 15.4% 16.9%

Mean 10,526 9,562 9,524 9,955 1,165 1,176 1,280 10.4 10.1 9.1 6.6% 5.3% 16.4% 16.8%

($ in millions)



Architectural Paint

Masco Corporation $12,478 $7,313 $7,353 $7,698 $1,195 $1,231 $1,341 10.4x 10.1x 9.3x 0.5% 2.9% 16.3% 16.7%

PPG Industries, Inc. 29,778 14,751 15,084 14,861 2,527 2,705 2,715 11.8 11.0 11.0 2.8% (1.6%) 17.1% 17.9%

The Sherwin-Williams Company 27,802 11,678 11,754 12,754 1,966 1,973 2,195 14.1 14.1 12.7 6.0% 3.7% 16.8% 16.8%

The Valspar Corporation 10,123 4,191 4,260 4,312 674 728 747 15.0 13.9 13.6 1.5% (3.0%) 16.1% 17.1%

Median $20,140 $9,495 $9,554 $10,226 $1,580 $1,602 $1,768 13.0x 12.5x 11.8x 2.1% 0.7% 16.6% 16.9%

Mean 20,045 9,483 9,613 9,906 1,590 1,659 1,749 12.8 12.3 11.6 2.7% 0.5% 16.6% 17.1%

Building Boards

Canfor Corporation $1,885 $3,223 $3,214 $3,434 $367 $400 $405 5.1x 4.7x 4.7x 11.8% 7.8% 11.4% 12.4%

Interfor Corporation 992 1,338 1,368 1,479 128 151 179 7.7 6.6 5.5 18.9% 6.7% 9.6% 11.0%


West Fraser Timber Co. Ltd. 2,884 3,307 3,385 3,735 419 483 536 6.9 6.0 5.4 10.0% 8.7% 12.7% 14.3%

Weyerhaeuser Co. 30,816 7,871 6,766 6,995 1,765 1,674 1,950 17.5 18.4 15.8 1.7% (4.2%) 22.4% 24.7%

Median $2,884 $3,223 $3,214 $3,434 $367 $400 $459 7.7x 6.6x 5.5x 10.8% 7.8% 12.2% 14.3%

Mean 7,910 3,577 3,390 3,627 588 609 706 9.7 8.9 7.6 10.7% 7.3% 13.6% 15.5%

Flat Glass

Apogee Enterprises, Inc. $1,563 $1,063 $978 $1,092 $154 $129 $157 10.2x 12.1x 9.9x 10.9% 4.7% 14.5% 13.2%

Asahi Glass Co., Ltd. 12,523 11,260 11,311 11,664 1,828 1,889 2,009 6.8 6.6 6.2 1.1% (3.3%) 16.2% 16.7%

Central Glass Co., Ltd. 1,283 1,990 2,079 1,933 206 224 204 6.2 5.7 6.3 8.0% 18.4% 10.3% 10.8%

CRH plc 38,156 28,990 30,161 31,693 2,943 3,377 3,766 13.0 11.3 10.1 9.2% 18.7% 10.2% 11.2%

Nippon Sheet Glass Co., Ltd. 3,985 5,268 5,603 5,078 327 530 575 12.2 7.5 6.9 1.9% 1.4% 6.2% 9.5%

PPG Industries, Inc. 29,778 14,751 15,084 14,861 2,527 2,705 2,715 11.8 11.0 11.0 2.8% (1.6%) 17.1% 17.9%

Median $8,254 $8,264 $8,457 $8,371 $1,077 $1,209 $1,292 11.0x 9.3x 8.4x 5.4% 3.0% 12.4% 12.2%

Mean 14,548 10,554 10,869 11,054 1,331 1,476 1,571 10.0 9.0 8.4 5.6% 6.4% 12.4% 13.2%

Other Materials

BlueScope Steel Limited $5,836 $6,976 $6,779 $7,952 $639 $700 $1,070 9.1x 8.3x 5.5x (0.1%) 4.7% 9.2% 10.3%

Compagnie de Saint-Gobain S.A. 35,411 42,276 42,014 43,691 4,267 4,277 4,655 8.3 8.3 7.6 (1.5%) (1.4%) 10.1% 10.2%

Eagle Materials Inc. 5,291 1,185 1,128 1,187 397 362 420 13.3 14.6 12.6 19.5% 5.8% 33.5% 32.1%

Fletcher Building Limited 6,210 6,534 6,564 6,888 626 617 713 9.9 10.1 8.7 4.1% 4.4% 9.6% 9.4%

Gibraltar Industries, Inc. 1,376 1,058 1,001 1,024 119 118 132 11.6 11.6 10.4 5.5% (3.8%) 11.2% 11.8%

Insteel Industries, Inc. 579 420 440 418 68 72 73 8.6 8.0 7.9 5.5% (1.7%) 16.1% 16.4%

NCI Building Systems, Inc. 1,459 1,685 1,689 1,778 150 165 184 9.8 8.8 7.9 12.0% 8.0% 8.9% 9.8%

Owens Corning 8,256 5,591 5,603 5,772 1,041 1,044 1,077 7.9 7.9 7.7 1.0% 4.7% 18.6% 18.6%

Quanex Building Products Corporation 932 928 929 900 103 109 111 9.1 8.5 8.4 1.8% 43.9% 11.1% 11.8%

Simpson Manufacturing Co., Inc. 1,819 845 857 931 163 175 191 11.2 10.4 9.5 7.3% 8.0% 19.3% 20.5%

USG Corporation 5,517 3,864 3,111 3,113 607 641 662 9.1 8.6 8.3 1.3% (17.6%) 15.7% 20.6%

Vulcan Materials Company 18,986 3,577 3,645 4,117 977 1,003 1,257 19.4 18.9 15.1 7.3% 6.5% 27.3% 27.5%

Median $5,404 $2,631 $2,400 $2,446 $502 $490 $541 9.4x 8.7x 8.4x 4.8% 4.7% 13.5% 14.1%

Mean 7,639 6,245 6,147 6,481 763 774 879 10.6 10.3 9.1 5.3% 5.1% 15.9% 16.6%

Median $6,829 $5,743 $5,835 $5,903 $790 $849 $916 10.2x 9.0x 8.4x 5.1% 3.9% 12.9% 14.2%

Mean 12,535 7,465 7,505 7,767 1,068 1,129 1,226 10.8 10.1 9.2 6.1% 4.8% 14.6% 15.6%

($ in millions)



Beacon Roofing Supply, Inc. $3,790 $4,127 $4,225 $4,304 $357 $344 $380 10.6x 11.0x 10.0x 18.4% 68.0% 8.7% 8.1%

Boise Cascade Company 1,352 3,868 3,912 4,176 160 161 190 8.4 8.4 7.1 11.7% 7.7% 4.1% 4.1%

Builders FirstSource, Inc. 3,126 6,276 6,319 6,629 342 373 446 9.1 8.4 7.0 52.0% 77.3% 5.4% 5.9%

HD Supply Holdings, Inc. 12,378 7,654 7,380 7,434 864 875 921 14.3 14.2 13.4 2.7% 5.9% 11.3% 11.8%

SIG plc 1,147 3,375 3,496 3,552 136 147 146 8.4 7.8 7.9 (0.1%) 8.9% 4.0% 4.2%

Pool Corporation 4,708 2,541 2,563 2,714 272 276 299 17.3 17.0 15.7 7.4% 8.4% 10.7% 10.8%

Watsco, Inc. 5,353 4,211 4,257 4,475 362 360 399 14.8 14.9 13.4 7.4% 3.5% 8.6% 8.4%

Wolseley plc 16,739 18,048 17,930 21,103 1,300 1,304 1,557 12.9 12.8 10.8 1.1% 7.5% 7.2% 7.3%

Median $4,249 $4,169 $4,241 $4,389 $350 $352 $390 11.7x 11.9x 10.4x 7.4% 8.1% 7.9% 7.7%

Mean 6,074 6,262 6,260 6,798 474 480 542 12.0 11.8 10.7 12.6% 23.4% 7.5% 7.6%

Source: Capital IQ. As of Dec. 31, 2016

Selected Public Companies – Distributors

Selected Public Companies – Roofing, Siding & Insulation

Selected Public Companies – Materials


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M&A Activity by Financial Sponsors – Financial sponsors continue to target the Building Products

market to deploy capital in order to take advantage of the industry’s strong growth dynamics. The charts

below highlight investments and exits since January 2015 involving private equity firms and U.S. based

Building Products companies.

Acquisitions of North American Building Products Companies by Private Equity Firms (2015 - 2016)

($ in millions)

Date Closed Target Acquiror Target Description

12/19/2016 Soft-Lite Windows Harvey Industries Manufacturer of vinyl replacement windows

12/6/2016 Delta Door and Hardware The Cook & Boardman Group Distributor and supplier of doors and related hardware

12/1/2016 Luminis Montreal The Luminaires Group Designer and manufacturer of decorative interior and exterior lighting

11/17/2016 Empire Today HIG Capital Provider of flooring and window products

11/3/2016 Northeast Wholesale Nail &

Fastener Supply

PrimeSource Building Products

(Platinum Equity)

Provider of fasteners and building materials

11/2/2016 J.E. Berkowitz Consolidated Glass Holdings

(Grey Mountain Partners)

Fabricator of a full suite of glass products including insulating,

engineered, tempered and laminated glass

11/2/2016 Brock White Company The Sterling Group Supplier and distributor of construction and building materials

including brick, stone and masonry accessories

10/13/2016 RBC Tile & Stone Virginia Tile Company (Fidus

Investment; Harren Equity

Partners)

Wholesaler and distributor of tiles and stones

10/6/2016 Dealers Building Supply The Firefly Group Distributor of building products including doors, door hardware and

fireplaces

10/6/2016 Henry Company (Graham

Partners; OceanBridge Partners)

American Securities Manufacturer of roofing and building-envelope products and systems

10/1/2016 Border Construction Specialties

(Svodoba Capital Partners)

The Sterling Group Provider of construction products including concrete accessories,

masonry supplies and sustainable building products

10/1/2016 Trimlite TriWest Capital Partners Manufacturer of decorative glass inserts for steel door fabricators

9/16/2016 Swenson Granite Company Polycor (PNC Mezzanine Capital;

TorQuest Partners)

Manufacturer and supplier of granite products

9/6/2016 Fabcon Platinum Equity Manufacturer of precast concrete products including wall panels,

wind-turbine towers and other related structures

8/11/2016 Winroc Foundation Building Materials

(Lone Star Funds; PennantPark

Investment Corporation)

Wholesaler and distributor of construction materials including drywall

and building and mechanical insulation

8/9/2016 Superior Plus (construction

products distribution)

Foundation Building Materials



Distributor of construction products including wall and ceiling

products

8/3/2016 American Platform & Scaffolding Safway Group Holding (Odyssey

Investment Partners; Twin Bridge

Capital Partners)

Distributor and marketer of mast climbing platforms

8/2/2016 Door Engineering and

Manufacturing

Senneca Holdings (Audax Group) Manufacturer of doors and fitting systems

8/1/2016 Keene Lumber Company US LBM Holdings (Kelso &

Company)

Provider of building materials including cabinetry, hardware, decking,

flooring, roofing, siding and windows

6/6/2016 Kith Kitchens Pfingsten Partners Manufacturer of semi-custom framed and frameless kitchen and

bath cabinetry


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($ in millions)


6/2/2016 Exteria Building Products

(Graham Partners)

Novik (Clearview Capital) Designer and manufacturer of composite exteriors

6/2/2016 Panolam Industries International

(Apollo Global Management)

Insight Equity Designer and manufacturer of decorative laminate panels for

commercial, institutional and residential applications

6/1/2016 Ken/API Supply Foundation Building Materials



Provider of construction materials and supplies including drywall and

plaster items, wall and ceiling systems, steel framing and other

related products

6/1/2016 Kent Gypsum Foundation Building Materials



Distributor of drywall and related building materials

6/1/2016 Raymond Building Supply US LBM Holdings (Kelso &

Company)

Supplier of residential and commercial building products including

lumber, trusses, garage doors, windows, doors, cabinets and custom

millwork

5/9/2016 Split Rail Fence & Supply Breakwater Investment

Management; Building Industry

Partners

Provider of fence services

5/6/2016 SEI Group Narrow Gauge Capital; Siguler

Guff & Company; The Goldman

Sachs Group

Provider of building products installation services

4/30/2016 Wall & Ceiling Supply Company GMS (AEA Investors) Provider of building material and applications including wallboard

and construction

4/25/2016 Twin-Star International (TriVest

Partners)

Z Capital Partners Manufacturer of home furnishings and bathroom vanity products

4/14/2016 Moulure Alexandria Moulding Industrial Opportunity Partners Manufacturer and distributor of solid wood and wood composite

mouldings

4/5/2016 ISC Surfaces Virginia Tile Company (Harren

Equity Partners)

Distributor of flooring and surface-covering products

4/5/2016 San Benito Shutter Co. LongWater Opportunities Manufacturer of wood shutter and panel components including

wood, poly panels, draperies, blinds and other shutter hardware

components

4/5/2016 Tierra Sol Ceramic Tile Shnier-Gesco (Blue Point Capital

Partners)

Distributor of ceramics and stones products

4/4/2016 M.R. Lee Building Materials GMS (AEA Investors) Provider of residential and commercial building materials including

drywall, metal studs, insulation and access doors

4/4/2016 Royal Building Products (Window

and Door Profiles Business)

OpenGate Capital Manufactures and distributes home remodeling products

4/1/2016 Homewood Building Supply Building Industry Partners Manufacturer and supplier of wood products

4/1/2016 Professional Handling &

Distribution

GMS (AEA Investors) Distributor of drywall and related products

3/31/2016 Alco Doors US LBM Holdings (Kelso &

Company)

Manufacturer and installer of interior and exterior doors

3/31/2016 Kenseal Construction Products Frontenac Company; Navigation

Capital Partners

Distributor of building and construction materials including

waterproofing, sealants, stucco, glazing and concrete masonry

restoration products

3/31/2016 Wilway Lumber Sales Fraser Valley Building Supplies

(Krystal Financial)

Provider of various types of building products including lumber,

plywood, roofing, electrical, plumbing, drywall and fencing products

3/30/2016 Design and Direct Source Materials Marketing (RAF

Industries)

Distributor of building products including ceramic tile, natural stone,

wood and porcelain

3/29/2016 Chauvet & Sons Cortec Group Manufacturer, developer and innovator of entertainment lighting

products

3/7/2016 3i Supply Distribution International (Advent

International; Audax Group)

Distributor of mechanical and industrial insulation products

3/6/2016 Safe-Way Garage Doors (Equity

Capital Partners)

The Ellis Company Manufacturer of garage doors


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($ in millions)


2/2/2016 Cascade Windows (Altamont

Capital Partners)

CenterOak Partners Manufacturer of custom vinyl windows, patio doors and sliding doors

2/2/2016 ICP Adhesives and Sealants Innovative Chemical Products

Group (Audax Group)

Provider of pressurized polyurethane foam adhesive formulations for

residential roofing, commercial roofing and insulation

2/1/2016 Parker's Building Supply US LBM Holdings (BlackEagle

Partners; Building Industry

Partners; Kelso & Company)

Distributor and supplier of building materials including hardware,

paint, power tools, windows, doors, cabinetry, lumber and more

2/1/2016 Sherman-Dixie Concrete

Industries

Forterra (Lone Star Funds) Manufacturer of precast concrete pipe

1/27/2016 Wolf-Gordon (Corinthian Capital

Group)

Saw Mill Capital Manufacturer and distributor of wall-coverings and interior building

products

1/22/2016 Northern International Sterno Products (Compass

Group Management)

Provider of outdoor lighting products

1/13/2016 Kovach AV Capital; ORIX Mezzanine &

Private Equity

Designers, manufacturers and installers of panel and glazing

systems for commercial building enclosures

1/8/2016 Quality Aluminum Products Blackford Capital Manufacturer of residential exterior aluminum products

1/7/2016 Darby Doors US LBM Holdings (BlackEagle



Manufacturer and retailer of housing construction products including

doors, mill work, hardware, bath accessories and building specialties

1/7/2016 Paradigm Window Solutions

(White Oak Partners)

CapitalWorks; Ironwood Capital Manufacturer of vinyl windows and patio doors

1/4/2016 T&L Distributing Warrior Creek Provider of surface flooring services

1/1/2016 Gypsum Supply Company GMS (AEA Investors) Provider of construction and building products including drywall,

ceilings, steel and insulation

12/31/2015 Worldwide Window Treatments Fleuron Enterprises (Ancor

Capital Partners)

Manufacturer of drapery hardware

12/23/2015 NexGen US LBM Holdings (BlackEagle


Manufacturer and distributor of building materials incluidng roof,

trusses, wall panels and floor trusses

12/21/2015 Builder Specialties Monomoy Capital Partners Provider of installation and building products including appliances,

fireplaces, mantels, garage doors, carriage style garage doors,

lighting and outdoor products

12/21/2015 CR Home Monomoy Capital Partners Provider of building products including appliances, countertops,

garage doors, hearth products, tile and flooring, glass and mirror,

lighting, cabinets and construction related products

12/14/2015 Grand Equipment Company Blackford Capital Distributor of construction equipment

12/12/2015 All-American Scaffold (Summit

Equity Group)

Safway Group Holding (Odyssey

Investment Partners)

Provider of scaffolding and shoring products

12/10/2015 Hathaway & Sons GMS (AEA Investors) Distributor of drywall and other specialty building products

12/9/2015 C.M.A. Supply Company Carter-Waters(Aiglon Capital

Management; Merit Capital

Partners)

Supplier of raw material for construction purposes including concrete

and masonry products

12/1/2015 Badgerland Supply GMS (AEA Investors) Manufacturer of wallboard and construction products

11/24/2015 Halco Lighting Technologies

(Lineage Capital)

Summer Street Capital Partners Manufacturer of lighting products

11/17/2015 Triumph Truss & Steel Company US LBM Holdings (BlackEagle


Manufacturer of truss and steel products including engineered roof

and floor trusses, structural steel and ornamental iron

11/6/2015 Crown Column & Millwork

(Carousel Capital)

HB&G Building Products (Ares

Capital; Graham Partners;

Wedbush Capital Partners)

Manufacturer of synthetic and wood columns used in residential

construction


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($ in millions)


11/6/2015 Duo-fast Carolinas SouthernCarlson (Tenex Capital

Management)

Distributors of fasteners and pneumatic tools to the furniture and

construction industries

11/5/2015 M3 Glass Technologies LongWater Opportunities Manufacturer of fabricated and decorative glass products

10/30/2015 USI Silver State USI (Seven Mile Capital Partners) Provider of residential and commercial installation systems including

fiberglass, mirrors, shower doors, garage doors, fireplaces and

storefront glass installation services

10/22/2015 Building Supply Association US LBM Holdings (BlackEagle



Distributor and supplier of building products specializing in home

furnishing, material delivery, repairing and window programs

10/20/2015 Willard A Selle Distribution International (Advent

International; Audax Group)

Distributor of insulation products specializing in the lamination of

fiberglass insulation for metal buildings

10/19/2015 Florida Screen Enterprises The RiteScreen Company

(Enhanced Capital Partners;

Seven Point Equity Partners)

Producer of door and window manufacturing components

10/12/2015 Cabinet Supply Rugby IPD (Leading Ridge

Capital Partners)

Provider of building products including cabinets hardware, custom

door, drawer, hardwood lumber, hardwood plywood and sand-paper

10/6/2015 Zane Offenbacher Aquatics (Antson

Capital)

Manufacturer and seller of fireplace tools and accessories

10/5/2015 GBS Building Supply US LBM Holdings (BlackEagle


Manufacturer of building and construction products including window

panels, doors, siding, roofing materials, insulation products, millwork,

cabinets, locks and railings

10/5/2015 LaCantina Doors JELD-WEN (Corporate Capital

Trust; Onex; Piper Jaffray, Triton

Pacific Capital Partners)

Manufacturer of opening door systems which include folding door

system, Bi-fold doors, aluminum doors, wood doors, impact doors

and temperature control doors

10/1/2015 Quantum Windows & Doors

(Pendulum Investments)

Nitze-Stagen Capital Partners;

Swiftsure Capital

Manufacturer of wood windows and doors

9/30/2015 Commercial Refrigerator Door

Company

Hussmann (Clayton, Dubilier &

Rice)

Manufacturer of temperature controlled doors

9/30/2015 Zarsky Lumber Kodiak Building Partners

(Building Industry Partners)

Operator of a chain of building-supply stores

9/24/2015 Harvey Industries Dunes Point Capital Manufacturer and distributor of building products including windows,

doors, siding and roofing

9/24/2015 LouMac Distributors US LBM Holdings (BlackEagle


Distributor of furniture items including vinyl, aluminum, fiberglass,

windows, interior doors and entry door systems

9/10/2015 Coating and Foam Solutions Accella Performance Materials

(Arsenal Capital Partners)

Provider of roofing products and services

9/10/2015 Cretex Concrete Products Forterra (Lone Star Funds) Manufacturer of precast and prestressed concrete construction

products

9/10/2015 Karona JELD-WEN (Onex) Manufacturer of specialty stile and rail doors

9/7/2015 Signature Glass Holdings Binswanger Glass (Grey

Mountain Partners)

Manufacturer of commercial glass and glazing systems

9/4/2015 Gold & Reiss US LBM Holdings (BlackEagle



Manufacturer of kitchen cabinets

9/2/2015 Coldwater Veneer Industrial Opportunity Partners Manufacturer of hardwood veneer and plywood

9/1/2015 Grabber Construction Products Dot Foods (Svoboda Capital

Partners)

Manufacturer of fasteners and fastening systems

9/1/2015 J&G Concrete Products Baymark Partners Manufacturer of concrete pipes

8/31/2015 Thermo-Tech Windows and

Doors

Bounds Equity Partners Manufacturer of vinyl windows and patio doors


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www.tmcapital.com


($ in millions)


8/28/2015 Arrow Building Center Aiglon Capital Management;

Marquette Capital Partners;

Triangle Capital

Supplier of building materials including lumber, hardware and home

improvement products

8/20/2015 US LBM Holdings Kelso & Company (Stanley

Osborne)

Distributor of building materials including lumber, roof and floor

trusses, siding and more

8/19/2015 Superior Manufacturing Group Checkers Industrial Safety

Products (Audax Group; Harvey

& Company)

Manufacturer of floor matting products

8/3/2015 MGM Industries, Inc. Custom Window Systems, Inc.

(Nautic Partners, LLC)

Manufacturer of custom PVC vinyl window and door products for

homeowners, builders and remodelers

7/31/2015 ProBuild Holdings, Inc.

(Devonshire Investors)

Builders FirstSource, Inc.

(JLL Partners, Inc. and Warburg

Pincus LLC)

Manufacturer and distributor of lumber and building materials to

professional builders, contractors and project-oriented consumers

7/14/2015 Better Life Technology, LLC Century Park Capital Partners Manufacturer of rollout vinyl flooring

7/10/2015 Cali Bamboo High Road Capital Partners Manufacturer of bamboo based, green building products including

bamboo fencing, flooring, decking, paneling and other accessories

7/6/2015 Artissimo Designs Inc.

(Huron Capital Partners)

Excelsior Capital Partners Designer, manufacturer and marketer of wall décor based on

purchased or licensed imagery

6/30/2015 Advanced Flooring & Design Interior Specialists

(Littlejohn & Company)

Manufacturer of a range of products for floors and interiors including

ceramic tiles, natural stone, hardwood, carpet, window coverings and

sheet vinyl products

6/29/2015 Northwest Carpets Lexmark Carpet Mills

(H.I.G. Capital, LLC)

Manufacturer of solution-dyed, broadloom carpet focused exclusively

on the hospitality market

6/19/2015 Royal Adhesives and Sealants

(Arsenal Capital Partners, PNC

Erieview Capital)

American Securities Manufacturer and distributor of industrial adhesives and sealants,

commercial roofing adhesives and mirror mastics

6/9/2015 Carolina Drawers Olon Industries

(Huron Capital)

Manufacturer of solid wood and ply wood drawer box products

6/9/2015 Rock Ridge Stone Salt Creek Capital Distributor of natural stone products used in outdoor applications

6/3/2015 Insulation Fabricators, Inc. Distribution International (Advent) Fabricates and distributes thermal and acoustical insulation products

for industrial and commercial markets

6/3/2015 A.H. Harris & Sons Frontenac Company Distributor of construction supplies to the heavy & highway,

commercial, industrial and residential markets

5/31/2015 Valterra Products Brookside Equity Partners, Scott

Capital Partners

Manufactures and distributes recreational vehicle plumbing

equipment and supplies including valves for sanitation, plumbing and

winterizing

5/29/2015 Vestal Manufacturing Enterprises

(MVC Capital)

Spell Capital Partners Manufacturer of metal building products including building materials,

fireplace accessories, iron castings and cast iron dampers

5/27/2015 Advanced Building Products, Inc. SRS Distribution

(Berkshire Partners)

Manufacturer and installer of aluminum replacement and storm

windows

5/19/2015 DiversiTech Corporation The Jordan Company Manufactures and distributes an extensive proprietary portfolio of

condensate management equipment, HVACR maintenance

chemical and electrical accessories

5/13/2015 Termo-Cell Industries US GreenFiber

(Tenex Capital Management)

Manufactures thermal and acoustical cellulose insulation, specialty

fibers and hydroseeding mulches

5/11/2015 PrimeSource Building Products Platinum Equity Distributor of fasteners and other building materials including nails,

screws and compressors

4/17/2015 Direct Cabinet Sales US LBM Holdings (Building

Industry Partners, BlackEagle

Partners)

Distributor and designer of kitchen cabinetry and related products

4/17/2015 Rosen Materials US LBM Holdings (Building


Partners)

Distributor of residential and commercial building products including

kitchen and bath cabinetry, countertops, stucco, roofing and

insulation

4/16/2015 New Energy Bedrooms Hillsdale Furniture

(Brookside Equity Partners)

Manufacturer and importer of bedroom furniture


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www.tmcapital.com


($ in millions)


4/10/2015 Rio Brands (Guardian Capital

Partners)

Webster Capital, Morgan Stanley

Alternative Investment Partners

Supplier of outdoor furniture and sportsman accessories

4/8/2015 Kitchen Kaboodle Lynx Equity Provider of kitchen appliances and accessories and home products

4/2/2015 Metalcrafts Tecta America

(Oaktree Capital Management)

Manufacturer of roofing and sheet metal products

4/1/2015 Design Specialties Blackthorne Partners, Individual

Investor

Manufacturer of glass fireplace doors

4/1/2015 RDL Supply The Cook & Boardman Group

(Ridgemont Equity Partners)

Distributor of commercial doors, door frames, door hardware and

related accessories

3/25/2015 J&B Materials Gypsum Management and

Supply

(AEA Investors)

Supplier and distributor of building materials including drywall, metal

studs, plaster, pool and general building materials

3/23/2015 Merchants Metals Atlas Holdings Manufacturer and distributor of ornamental steel and aluminum

fence systems

3/20/2015 Petry Roofing Supply SRS Distribution

(Berkshire Partners)

Distributor of residential and commercial roofing products servicing

the Greater St. Louis market

3/19/2015 Great Western Building Materials Foundation Building Materials (CI

Capital Partners)

Distributor of building products and related equipment including

gypsum wallboards, acoustical ceiling products, metal framing

products and plaster products

3/19/2015 ProWall Building Products Foundation Building Materials (CI

Capital Partners)

Manufacturer of one-coat stucco, surface coatings and expanded

polystyrene (EPS) products

3/17/2015 Pronamic Industries Flanders

(Insight Equity)

Distributor and manufacturer of fiberglass materials used in the air

filtration and related industries

3/13/2015 Hanson Building Products,

Building Products business in

North America and U.K.

Lone Star Funds Manufacturer of a diversified range of concrete and clay building

products

3/2/2015 Lampert Yards US LBM Holdings (Building


Partners)

Supplier of lumber and building materials to homeowners,

professional builders and commercial builders

2/27/2015 Phillips Tile

(Goense & Company, Greyrock

Capital Group)

Residential Design Services (DBI

Capital, Huntington Capital, Trive

Capital)

Provider of floor and wall tiles, natural stone and synthetic counter

tops for residential home builders

2/26/2015 ATIS Group

(Cornerstone Capital Partners,

Cyprium Partners)

Desjardins Capital régional et

coopératif (Fondaction)

Manufacturer of doors and windows in Canada

2/25/2015 J.A. Jack & Sons, Inc. Harrison Gypsum, LLC

(H.I.G. Capital, LLC)

Miner and processer of limestone for industry and agricultural

sectors

2/18/2015 Kitchen Creations Lynx Equity Manufacturer and custom designer of kitchen and bath cabinetry

2/9/2015 IPS Corporation (Calera Capital) Nautic Partners Manufacturer of adhesives, solvent cements, plumbing specialty

items and various components and supplies

2/9/2015 Carroll Chair Mity Enterprises

(Prospect Capital)

Manufacturer of tables and chairs

1/26/2015 Glassworks

(Bounds Equity Partners)

Binswanger Glass (Grey

Mountain Partners, Guff &

Company)

Provider of glass fabrication, installation of shower doors, mirrors,

table glass, windows and patio door services

1/2/2015 Kiva Kitchen & Bath

(Rock Hill Capital)

Morrison Supply

(Advent International)

Provides plumbing fixtures, hardware, appliances, cabinetry, and

counter tops for bathrooms and kitchen


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www.tmcapital.com

($ in millions)

EnterpriseDate

Closed

Company Name

(Exiting P.E. Sponsor)Exit Type Acquiror Company Description Value

Exits of U.S. Based Building Products Companies by Private Equity Firms (2015 - 2016)

11/18/2016 World and Main - Houston

(Littlejohn & Co.)

Merger /

Acquisition

Hardware

Distribution

Warehouses, Inc.

Distributor of hardware products to independent

hardware retailers

11/15/2016 Koroseal Interior Products

(Peak Rock Capital)

Merger /

Acquisition

Sangetsu

Corporation

Manufacturer and distributor of custom interior

products

$134.0

11/9/2016 Halex

(American Capital)

Merger /

Acquisition

GCP Applied

Technologies

Manufacturer and distributor of flooring products $47.0

9/20/2016 United Copper Industries

(KPS Capital Partners)

Merger /

Acquisition

Southwire Manufacturer and distributor of copper building wires

and cables

6/15/2016 Rugby IPD

(Building Industry Partners;

Leading Ridge Capital)

Merger /

Acquisition

Hardwoods

Distribution

Distributor of specialty building products, including

hardwood plywood, composite panels, solid surface

countertops, doors and millwork

$170.0

5/25/2016 GMS

(AEA Investors)

IPO Distributor of drywall, acoustical and other specialty

building materials

$147.0

4/21/2016 InterWrap

(Quad-C Management)

Merger /

Acquisition

Owens Corning Manufacturer of laminated textiles $450.0

2/29/2016 LSI Corporation of America

(CoBe Capital)

Merger /

Acquisition

Stevens Industries Manufacturer of laminated casework cabinets

1/20/2016 Superior Tool

(Prospect Partners)

Merger /

Acquisition

Magna Industries Manufacturer and distributor of a complete range of

consumer and branded pipe working, and specialty

plumbing tools

12/18/2015 Nudo

(BNY Mellon; GarMark

Partners; RFE Investment)

Merger /

Acquisition

Grupo Verzatec Manufacturer of custom prelaminated panels for

various commercial and industrial construction

applications

$160.0

12/17/2015 Clarion Industries

(Palladium Equity Partners)

Merger /

Acquisition

Kronospan Manufacturer of fiberboard and laminate flooring

12/1/2015 BMC Stock Holdings

(3P Equity Partners; Building

Industry Partners)

Reverse

Merger

Building Materials

Holding

Provider of building materials and installation services

in the United States

$549.0

11/2/2015 Woodcraft Industries

(Olympus Partners)

Merger /

Acquisition

Quanex Building

Products

Manufacturer of hardwood and engineered wood

furniture

$248.5

10/1/2015 Roofing Supply Group

(Clayton, Dubilier & Rice)

Merger /

Acquisition

Beacon Roofing

Supply

Distributor of residential and commercial roofing

products

$1,142.0

8/24/2015 Interline Brands

(Goldman Sachs Group; P2

Capital Partners)

Merger /

Acquisition

The Home Depot Provider of logistics and supply chain management

services

$1,625.0

8/24/2015 Quest Construction Products

(Audax Group; Moelis Capital

Partners)

Merger /

Acquisition

Building Materials

Corporation of

America

Manufacturer of protective systems and coatings for

the construction industry

7/31/2015 ProBuild Holdings

(Devonshire Investors)

Merger /

Acquisition

Builders

FirstSource

Distributor of lumber and building materials to

builders, contractors, and tradesmen in the United

States

$3,448.1

4/1/2015 Ainsworth Engineered

(Brookfield Capital Partners)

Merger /

Acquisition

Norbord Manufacturer and supplier of oriented strand board

including flooring products, stair tread panels,

stringers and risers for stairs

$616.2

3/9/2015 AF Lighting

(Consortium of PE firms)

Merger /

Acquisition

Almo Manufacturer and distributor of specialty lighting and

electrical products through catalogs, online portals

and retail outlets

2/24/2015 M&M Manufacturing

(TGF Management)

Merger /

Acquisition

MiTek Industries Fabricator of custom sheet metal products for

residential and commercial applications

1/29/2015 Monarch

(Taylor Morrison Home)

Merger /

Acquisition

Mattamy Homes Provider of construction services including the

development and construction of single-family homes

and condominiums

$278.3

1/16/2015 CENTRIA Incorporated

(Riverfront Capital Fund;

SMST Management)

Merger /

Acquisition

NCI Group, Inc.;

Steelbuilding.com

Designer, developer, and manufacturer of engineered

wall, roof, and floor systems, as well as provides coil

coating services

$245.0

1/14/2015 Climatec Building

Technologies Group

(Pegasus Capital Advisors)

Merger /

Acquisition

Robert Bosch Provider of energy efficiency, building automation,

security and life-safety services

$226.0

Building Products Industry Spotlight Contact Information

- 21 -

www.tmcapital.com

TM Capital’s Industrial Team

TM Capital Corp. Disclaimer

The information and opinions in this report were prepared by TM Capital Corp. (“TM”). The information herein is believed by T M to be

reliable but TM makes no representation as to the accuracy or completeness of such information. There is no guarantee that th e views and

opinions expressed in this communication will come to pass. TM may provide, may have provided or may seek to provide ad visory services

to one or more companies mentioned herein. In addition, employees of TM may have purchased or may purchase securities in one or more

companies mentioned in this report. Opinions, estimates and analyses in this report constitute the current judgment of the author as of the

date of this report. They do not necessarily reflect the opinions of TM and are subject to change without notice. TM has no o bligation to

update, modify or amend this report or to otherwise notify a reader thereof in the ev ent that any matter stated herein, or any opinion,

estimate, forecast or analysis set forth herein, changes or subsequently becomes inaccurate. This report is provided for info rmational

purposes only. It is not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any financial instruments or to

participate in any particular trading strategy in any jurisdiction.

W. Gregory Robertson

Managing Director

(212) 809-1410

[email protected]

Michael S. Goldman

Managing Director

(212) 809-1419

[email protected]

Jonathan I. Mishkin

Managing Director

(212) 809-1413

[email protected]

Jerome S. Romano

Managing Director

(617) 259-2206

[email protected]

Paul R. Smolevitz

Managing Director

(212) 809-1416

[email protected]

Andy B. Krna

Vice President

(212) 809-1442

[email protected]

New York641 Lexington Avenue30th FloorNew York, NY 10022Tel: (212) 809-1360

Boston201 Washington Street32nd FloorBoston, MA 02108Tel: (617) 259-2200

Atlanta3575 Piedmont Road NESuite 1010, Building 15Atlanta, GA 30305Tel: (404) 995-6230 Member: FINRA/SIPC

TM Capital Corp. is a partner-owned investment banking firm based in New York, Boston and Atlanta, which has completed over 300 transactions with a combined value in excess of $17.5 billion. Since 1989, we have advised clients navigating a full range of critical transactions, including complex mergers, acquisitions, debt and equity financings, minority and majority recapitalizations, restructurings, and advisory services including takeover defense, fairness and solvency opinions and valuations. We have built deep industry expertise in key sectors and our team regularly publishes research highlighting current and emerging trends in targeted industries and markets. TM Capital is a member firm of Oaklins, the world’s most experienced mid-market M&A advisor with over 700 M&A professionals in over 60 offices operating in the major financial centers in the world. Members have closed over 1,500 transactions totaling more than $75 billion in value over the past five years. TM Capital is an independent investment banking firm that is affiliated with Oaklins. Oaklins is the collective trade name of independent member firms affiliated with Oaklins International Inc. For details regarding the nature of this affiliation, please refer to www.oaklins.com/legal.

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