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Mike Rosendahl

E: mrosendahl@pcecompanies.com

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Industry Trends

Lumber Prices Continue to Fall

Lumber prices in December dropped to $371.60 per thousand board feet, down 70% from their peak of $1,450 in March 2022. Rising mortgage rates and home prices have slowed the home-building market, one of the largest sources of demand for lumber. Lumber is expected to rebound with the overall economy and is nearing its price floor due to low inventories and dwindling production activity.1

Nonresidential Construction Employment Up 27,000 in December

The construction industry has recovered approximately 92.15%, just over 1 million, of the jobs lost during the beginning of the pandemic, adding 22,000 net jobs in December alone. Unemployment in construction is 5%, about 1.1% above the employment rate of all industries. Encouragingly, the nonresidential construction category expanded by 27,000 net jobs, outpacing the broader construction industry.2

Strong M&A Activity Among Roofing Contractors

Beacon Roofing Supply acquired its third company since February, adding Coastal Construction Products to its roofing and building products portfolio. Coastal will add 18 locations to Beacon’s previous 13 waterproofing locations. The latest acquisition reflects its “Ambition 2025” strategy to deploy capital toward M&A to accomplish its target revenue CAGR of 8.5% and EBITDA CAGR of 15%.3

Housing Starts Cool in Q4, Expected to Continue in 2023

New single-family home construction continued to decline through December as the industry fought skyrocketing borrowing rates and growing home prices. Residential starts were cut by 0.5% in November, dropping to an annualized 828,000, the lowest since May 2020. Although mortgage rates have cooled in recent months, borrowing costs are still double those of the prior year, and interest rates are expected to increase in 2023.4

Largest Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Infrastructure and Energy Alternatives, Inc.
  • MasTec, Inc. 
  • $1,207.60
  • Ozark Logistics, LLC/Ozark Materials, LLC
  • Ingevity Corporation
  • $325.00
  • Martin Door Manufacturing, Inc.
  • WWS Acquisition, LLC
  • $187.80
  • Eagle Ford sand mining operations of Monarch Silica, LLC
  • ProFrac Holding Corp.
  • $175.00
  • Falcon Stainless, Inc.
  • CSW Industrials, Inc. 
  • $36.00
  • Industrial Service Solutions, LLC
  • Wynnchurch Capital, L.P
  • $30.80
  • Daurity Springs Quarry
  • Blue Water Industries LLC
  • $24.09
  • Six Companies
  • Pineapple Energy Inc.
  • $21.95
  • Voltrek, LLC
  • Orion Energy Systems, Inc. 
  • $19.65
  • Arizona Businesses of Pima Door & Supply, Inc. and Sunrise Carpentry, Inc.
  • Builders FirstSource, Inc. 
  • $9.50

Other Financial Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Bobcat Power Holdings, LLC
  • Cotton Creek Capital Management, LLC
  • n/a
  • STR Mechanical, LLC
  • SkyKnight Capital, L.P.
  • n/a
  • K.G. Stevens Inc.
  • Borgman Capital LLC
  • n/a
  • McDanel Advanced Ceramic Technologies, LLC
  • Artemis Capital Partners Management Co., LLC
  • n/a
  • American Combustion Industries, Inc.
  • Huron Capital Partners, LLC
  • n/a

Other Strategic Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Substantially all of the assets of Dawson Van Orden, Inc.
  • urban-gro, Inc.
  • $7.30
  • JDS Manufacturing, inc.
  • Pfaudler US Inc.
  • $.050
  • Dallas Air Solutions, LLC
  • Matrix Construction Services Limited
  • n/a
  • Hultgren-Tillis Engineers
  • Shannon & Wilson, Inc.
  • n/a
  • Engineering division of Veregy
  • IMEG Corp.
  • n/a
  • Gerstenmaier Consulting, LLC
  • Vanasse Hangen Brustlin, Inc.
  • n/a
  • Odeh Engineers, Inc.
  • WSP USA
  • n/a
  • Quarry Tile LLC
  • Fireclay Tile, Inc.
  • n/a
  • Homes by Keystone, Inc.
  • Guardian Booth LLC
  • n/a

 

Source S&P Capital IQ as of 1/9/2023 and PCE Proprietary Data

PCE Transactions

Contacts

Michael Poole

Orlando Office

407-621-2112 |

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Michael Rosendahl

New York Office

201-444-6280 Ext 1 |

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Data Assumptions

This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only.

Glossary

EBIT - Earnings Before Interest and Taxes
EBITDA - Earnings Before Interest, Taxes, Depreciation, Amortization
LTM - Last Twelve Months
TEV - Total Enterprise Value

Sources:

  1. “Lumber - 2023 Data - 1978-2022 Historical - 2024 Forecast.” Trading Economics. 31 December, 2022.
  2. “Nonresidential Construction Employment Up 27,000 in December, Says ABC.” Associated Builders and Contractors. 7 January, 2023.
  3. “Beacon Acquires Coastal Construction in Florida, Adds 2 Other Branches and Launches Mobile App.” MDM Distribution Intelligence. 1 November, 2022.
  4. Pickert, R. “US Housing Starts, Permits Fall on Slide in Single-Family Homes.” Yahoo Finance. 20 December, 2022.
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