Building Products Industry - Cherry Tree & Associates · expressed interest in revising the North American Free Trade Agreement (NAFTA), a trade deal between the U.S., Canada, and

Building Products IndustryQ1 2018

• The Macroeconomic Picture• Building Products Industry Update• Sector Spotlight: Record High Lumber Prices• Mergers & Acquisitions• Cherry Tree Building Products Index

Inside this report:

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Cherry Tree Research | Building Products Industry Report

Sources: Federal Reserve Bank of St. Louis, Capital IQ, Bureau of Economic Analysis, Bloomberg, American Institute for Economic Research

S&P 500 CONSUMER CONFIDENCE

U.S. INTEREST RATES UNEMPLOYMENT RATE & JOB GROWTH

Figures in Millions

The U.S. economy had an eventful start to 2018, as the S&P 500’s performance fluctuated greatly. After reachinga record high of 2,872.87 near the end of January, the index subsequently dropped over 10% at the beginning ofFebruary. The S&P 500 has since performed in between this high-low range. However, despite the marketinstability, the first quarter saw consumer confidence reach its highest level since November 2000. Theunemployment rate remained at 4.1% throughout the quarter, the lowest level in seventeen years. Also of note,the Federal Reserve raised interest rates from 1.5% to 1.75% in March, which is the highest the rates have beensince the 2008 financial crisis.

SUMMARY

The Macroeconomic Picture

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Sources: Capital IQ, Cherry Tree & Associates Research, MarketWatch, CNN Money

EQUITY PERFORMANCE HISTORICAL ENTERPRISE VALUE/EBITDA

As the markets experienced a volatile start to the new year, so too did the Cherry Tree Building Products Index,

which mirrored the S&P 500’s movement. Much of the volatility was caused by threats of a trade war between the

U.S. and China, as well as concerns that the Federal Reserve is raising rates too fast. Despite the similar

movements to start the year, the Cherry Tree Building Products Index has underperformed the S&P 500 over the

last twelve months, posting a 6.3% return compared to the S&P 500’s 11.8%.

Overall, 58 building products M&A transactions occurred in the first quarter of 2018. The largest proposed deal of

the first quarter was Gebr. Knauf’s $6.7 billion bid to purchase USG Corp. from Berkshire Hathaway, which was

rejected. The largest agreed upon transaction was Clayton, Dubilier & Rice’s acquisition of Ply Gem Holdings

(NYSE:PGEM) for $2.3 billion. Other notable deals include William Lyon Home acquiring RSI Communities for

$423 million, and BlueLinx Corporation purchasing lumber distributor Cedar Creek for $413 million.

INDUSTRY UPDATE

Building Products Industry Update

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Sector Spotlight: Record High Lumber Prices

4Cherry Tree Research | Building Products Industry Report

The lumber and wood products sector of the building products industry has experienced a tumultuous past few months, as wood prices have skyrocketed to record levels. Lumber futures traded on the Chicago Mercantile Exchange rose over 50% in the fourteen months leading up to March. We believe there are three main reasons behind these surging lumber prices:

• U.S.-Canada Trade Dispute: The first major factor influencing the price of wood is the ongoing trade dispute between the U.S. and Canada. Tensions between the two countries escalated in 2016 after President Trump expressed interest in revising the North American Free Trade Agreement (NAFTA), a trade deal between the U.S., Canada, and Mexico that effectively removes taxes on imports between the three countries. The trade relationship was further strained in December 2016, when U.S. lumber companies petitioned to increase tariffs on Canadian lumber companies. The petition claimed that the Canadian government was subsidizing Canadian lumber companies, resulting in unfair competition that forced U.S. firms to close mills, layoff workers, and lose market share. In November 2017, after negotiations between the two countries broke down, the Trump administration decided to act upon the petition by imposing tariffs of 20% or more on Canadian saw mills. Given that a significant amount of Canadian lumber is used in the U.S., the tariffs are a contributing factor to the record-high lumber prices.

• Natural Disasters: The dramatic rise in lumber prices can also be attributed to natural disasters that hit North America recently. Last July, wild fires tore through British Columbia, the region that produces almost half of all Canadian lumber. While summer wild fires are common in Canada, these fires were the worst the lumber industry has experienced in over a decade, burning an area the size of Rhode Island. The fires shut down production in over a half-dozen mills, which account for 14% of British Columbia’s timber and 3% of North America’s output. While the Canadian wild fires were slowly put out, the lumber industry continued to see challenges. In late August and early September, Hurricane Irma hit the southern U.S., devastating Florida and Puerto Rico. Several lumber producers in Florida, Georgia, and the Carolinas were forced to temporarily shut down their operations. Simultaneously, demand for lumber rose, as homeowners and businesses looked to repair and rebuild in the aftermath of the hurricane. The reduction in North American lumber supply caused by these two natural disasters further contributed to the rising price of lumber.

• Climbing Transportation Prices: In addition to trade disputes and natural disasters, a nationwide rise in trucking costs is also responsible for driving up lumber prices. Rates for trucks began to rise near the end of 2017, as freight volumes hit near-record highs, largely a result of a strong holiday season for retailers and increased shipping from manufacturers. The close of 2017 also saw the implementation of a new federal rule that requires most long-distance truckers to track their driving time by using electronic logging devices, resulting in stricter compliance with hour limitations that has pushed up truck rates. Adding even more fuel to the fire, the price of diesel reached its highest level in almost three years near the beginning of 2018. These three factors have led trucking prices to rise, making lumber more expensive to transport.

While these events have directly affected the lumber sector, other players in the building products industry are also feeling the sting. For example, with framing lumber accounting for 18% of the selling price of the average home, and more than 25% of lumber used in U.S. homes coming from Canada (now subject to the 20%+ tariff), U.S. homebuilders are being hit hard by the increased prices. On average, homebuilders are now paying over $1,300 more per single family home. Other building products sectors that are reliant on wood, such as cabinetry producers and floor products manufacturers, are feeling the effect of rising lumber prices. As such, building products professionals across all sectors are keeping a close eye on the growing lumber prices and the underlying causes.

Sources: Wall Street Journal, Washington Post, Reuters, Bloomberg, Chicago Tribune

Cherry Tree Research | Building Products Industry Report 5

Mergers and Acquisitions: 2018-Q1

Announced Enterprise Enterprise Value/

Date Acquirer Target Target Description Value Revenue EBITDA

03/19/2018 Harvey Industries, Inc. Thermo-Tech Windows and Doors LLC Vinyl window and door manufacturer - - -

03/19/2018 Harbour Group Nationwide Industries Inc. Hardware products manufacturer - - -

03/14/2018 Stella-Jones Inc. (TSX:SJ) All Assets of Wood Products Industries Inc. Wood products manufacturer 3.3 - -

03/14/2018 L Catterton Airxcel, Inc. HVAC appliances manufacturer - - -

03/13/2018Horizon North Logistics Inc. (TSX:HNL)

Shelter Modular Inc. Modular buildings manufacturer 3.7 - -

03/12/2018 BlueLinx Corporation Cedar Creek Holdings, Inc. Lumber distributor 413.0 0.3 6.9

03/08/2018 SRS Distribution, Inc. American Roofing Supply, Inc. Roofing products distributor - - -

03/08/2018 M-D Building Products, Inc. RCR International Inc. Home improvement products manufacturer - - -

03/08/2018 ECMD, Inc. Klumb Lumber Company, Inc. Lumber distributor - - -

03/07/2018 Tyman plc (LSE:TYMN) Ashland Products Inc. Window and door hardware manufacturer 101.0 1.5 9.0

03/06/2018 - CENTRIA Incorporated Insulated metal panels manufacturer - - -

03/06/2018 Majestic Marble And Glass Company Builder's Glass & Hardware Inc. Hardware and building products retailer - - -

03/05/2018 U.S. Concrete, Inc. (NasdaqCM:USCR) Assets of Golden Spread Redi-Mix, Inc. Ready-mixed concrete plants - - -

03/01/2018 Foundation Investment Partners, LLC Discount Drainage Supplies Plumbing products supplier - - -

02/28/2018 JELD-WEN Holding, Inc. (NYSE:JELD) American Building Supply, Inc. Door and hardware manufacturer - - -

02/28/2018 JELD-WEN Holding, Inc. (NYSE:JELD) A&L Windows Pty Limited Window and door manufacturer - - -

02/28/2018 Dvele, Inc. Hallmark Southwest Corporation Prefabricated house manufacturer - - -

02/28/2018 -Frac Sand Assets of NexGen Mining Incorporated

Sand mining properties - - -

02/28/2018 Wind Point Partners Ox Engineered Products, LLCSheathing and insulation products manufacturer

- - -

02/27/2018 ACG Materials Kelly Limestone, LLCLimestone and gypsum products manufacturer

- - -

02/26/2018 CEMATRIX Corporation (TSXV:CVX) MixOnSite USA, Inc. Low density foam concrete supplier 5.0 - -

02/22/2018 Stella-Jones Inc. (TSX:SJ)Substantially All the Operating Assets Employed in the Business of Prairie Forest Products

Treated wood products manufacturer 20.9 - -

02/20/2018 William Lyon Homes, Inc. RSI Communities LLC Homebuilder in California and Texas 423.0 6.3 -

02/15/2018 Architectural Surfaces Group Bedrock International, LLC Granite and marble products distributor - - -

02/14/2018CEMEX, Inc.; Aalborg Cement Company Inc.

Lehigh White Cement Company Cement producer 275.7 1.9 10.6

02/14/2018 Summit Materials, Inc. (NYSE:SUM) Mertens Construction Company, Inc. Aggregate and limestone producer - - -

02/14/2018 Summit Materials, Inc. (NYSE:SUM) Metro Readymix, LLC Concrete manufacturer - - -

02/12/2018 Andeavor (NYSE:ANDV)Three Asphalt Terminal Assets & 50% Interest in Paramount-Nevada Asphalt Company, LLC

Asphalt manufacturer 75.0 - -

$ in millions

Sources: Capital IQ, Cherry Tree & Associates Research



$ in millions

6

Announced Enterprise Enterprise Value/

Date Acquirer Target Target Description Value Revenue EBITDA

02/05/2018Atlas Engineered Products Ltd. (TSXV:AEP)

Highwood Trusses Ltd. Engineered wood products manufacturer 2.3 0.8 -

02/05/2018 Berkshire Hathaway Inc. (NYSE:BRK.A) Production Tool Supply Company LLC Industrial tools supplier - - -

02/02/2018Foundation Building Materials, Inc. (NYSE:FBM)

RM Supply Inc. Building materials supplier - - -

02/02/2018Foundation Building Materials, Inc. (NYSE:FBM)

ArmCom Distributing Company Acoustic ceiling panels distributor - - -

02/02/2018The Edgewater Funds; Duchossois Capital Management LLC; Air Filtration Holdings, LLC

RoboVent Products Group, Inc. Air filtration systems manufacturer - - -

02/01/2018 Foley Products CompanyCertain Drainage Assets in Alabama, Georgia and Tennessee of Forterra, Inc.

Pipe manufacturer - - -

01/31/2018 Clayton, Dubilier & Rice, Inc. Ply Gem Holdings, Inc (NYSE:PGEM) Exterior building products manufacturer 2,260.6 1.1 9.9

01/31/2018 Clayton, Dubilier & Rice, Inc. Atrium Corporation Window and door manufacturer - - -

01/31/2018 Weekes Forest Products, Inc. Snavely Forest Products, Inc. Lumber and building products distributor - - -

01/31/2018 Bobrick Washroom Equipment, Inc. Thrislington Cubicles Limited Washroom products manufacturer - - -

01/30/2018 The Delaney Co. Bravura Brass Brass door hardware manufacturer - - -

01/19/2018 Parksite Inc. Atlantic Plywood Corporation Hardwood distributor - - -

01/19/2018 Slocomb Windows and Doors, Inc.Residential Division of Lockheed Window Corp.

Window and door manufacturer - - -

01/19/2018 Ohio Awning & Manufacturing Co., Inc. The Canvas Exchange Inc. Awning manufacturer - - -

01/18/2018 CalAtlantic Group, Inc. Candlelight Homes, LLC Homebuilder in Utah - - -

01/18/2018 ICP Construction, Inc. Arizona Polymer Flooring, Inc. Flooring products manufacturer - - -

01/17/2018 Clearlake Capital Group, L.P. Janus International Group, LLC Steel roll-up door manufacturer - - -

01/16/2018 Vertiv Group Corporation Energy Labs Inc. Custom HVAC systems manufacturer - - -

01/15/2018 ITOCHU International Inc. Alta Forest Products LLC Wood fence board manufacturer - - -

01/15/2018 NIBE Industrier AB (publ) (OM:NIBE B) Briskheat Corporation Heating products manufacturer - - -

01/10/2018 U.S. Concrete, Inc. (NasdaqCM:USCR) All Assets of On Time Ready Mix Inc. Ready-mixed concrete producer - - -

01/09/2018 Sprout Tiny Homes, Inc. (OTCPK:STHI)Substantially All Assets of EcoCabins, LLC

Modular home dealer - - -

01/09/2018 Bohle America, Inc. The Group Legacy, L.C.Kitchen and bathroom hardware manufacturer

- - -

01/08/2018 GAL Manufacturing Company, LLC Courion Industries, Inc. Freight door manufacturer - - -

01/05/2018 Champion Enterprises Holdings, LLC Skyline Corporation (AMEX:SKY) Modular housing manufacturer - - -

01/04/2018 Metromont Corporation The Shockey Precast GroupStructural and architectural precast concrete systems producer

- - -

01/03/2018 HD Supply Construction Supply, Ltd. A.H. Harris & Sons, Inc. Construction supplies distributor 380.0 - -

01/03/2018 Construction Supply Holdings, LLC Brock-White Co. of Wisc., Inc. Building products manufacturer - - -

01/02/2018 Allegion plc (NYSE:ALLE) Technical Glass Products, Inc. Window manufacturer - - -

Mergers and Acquisitions: 2018–Q1 (continued)



As of April 1, 2018

($ in millions) Market Enterprise LTM LTM LTM Gross EBITDA Enterprise Value/ 3-Yr Rev

Company Cap Value Revenue Gross Profit EBITDA Margin Margin Revenue EBITDA Growth

Cherry Tree Building Products Index $3,299.3 $4,293.1 $3,563.2 $830.2 $400.4 25.9% 12.4% 1.5x 11.4x 10.1%

Median Summary

Distributors $1,254.2 $1,673.6 $2,490.6 $612.3 $189.3 23.6% 5.4% 0.6x 10.8x 7.4%

Homebuilders $4,521.4 $6,934.8 $5,245.7 $1,016.6 $525.4 20.1% 9.5% 1.1x 11.5x 14.6%

HVAC $14,891.7 $16,650.2 $9,018.6 $2,779.0 $1,301.2 30.8% 14.8% 2.1x 11.7x 4.4%

Roofing, Siding & Insulation $6,859.7 $7,271.1 $3,032.4 $982.2 $496.4 27.4% 17.5% 2.0x 12.2x 5.8%

Windows & Doors $870.8 $1,074.8 $844.1 $247.1 $106.1 25.6% 11.3% 1.1x 9.0x 10.3%

Plumbing & Cabinetry $8,826.2 $9,151.1 $5,275.5 $1,973.4 $742.9 35.4% 14.2% 1.9x 12.4x 6.3%

Floors & Surfaces $1,810.8 $2,186.6 $2,272.6 $616.0 $140.3 28.4% 9.8% 1.2x 10.7x 2.7%

Lumber & Wood Products $3,200.5 $3,429.8 $3,714.9 $851.9 $656.6 31.2% 24.0% 1.3x 6.4x 11.6%

Cement, Concrete & Aggregates $11,505.1 $16,213.1 $3,989.0 $1,142.4 $975.4 30.6% 19.8% 2.0x 10.8x 10.1%

Distributors

Beacon Roofing Supply, Inc. $3,609.4 $5,583.5 $4,496.5 $1,094.6 $383.5 24.3% 8.5% 1.2x 14.6x 23.8%

Bluelinx Holdings Inc. $298.0 $610.1 $1,815.5 $231.0 $32.3 12.7% 1.8% 0.3x 18.9x (2.8%)

BMC Stock Holdings, Inc. $1,313.7 $1,673.6 $3,366.0 $795.5 $189.6 23.6% 5.6% 0.5x 8.8x 36.9%

Boise Cascade Company $1,500.2 $1,761.3 $4,432.0 $612.3 $221.3 13.8% 5.0% 0.4x 8.0x 7.4%

Builders FirstSource, Inc. $2,264.1 $3,991.0 $7,034.2 $1,727.4 $382.3 24.6% 5.4% 0.6x 10.4x 63.7%

CanWel Building Materials Group Ltd. $382.6 $546.6 $905.8 $121.3 $49.2 13.4% 5.4% 0.6x 11.1x 14.4%

Foundation Building Materials, Inc. $639.1 $1,208.9 $2,060.9 $598.7 $137.1 29.0% 6.7% 0.6x 8.8x 59.4%

GMS Inc. $1,254.2 $1,822.8 $2,490.6 $814.3 $189.3 32.7% 7.6% 0.7x 9.6x 0.0%

Goodfellow Inc. $51.1 $90.6 $395.7 $66.3 $6.7 16.8% 1.7% 0.2x 13.6x 2.4%

Hardwoods Distribution Inc. $312.3 $383.9 $826.9 $153.0 $44.3 18.5% 5.4% 0.5x 8.7x 31.5%

Huttig Building Products, Inc. $135.9 $238.6 $753.2 $155.8 $5.0 20.7% 0.7% 0.3x - 6.5%

Watsco, Inc. $6,195.0 $6,389.8 $4,342.0 $1,065.7 $372.9 24.5% 8.6% 1.5x 17.1x 3.3%

Ferguson plc $18,577.9 $19,979.2 $22,268.1 $6,475.7 $1,714.9 29.1% 7.7% 0.9x 11.7x 7.4%

25th Percentile $312.3 $546.6 $905.8 $155.8 $44.3 16.8% 5.0% 0.4x 8.8x 3.3%

Median $1,254.2 $1,673.6 $2,490.6 $612.3 $189.3 23.6% 5.4% 0.6x 10.8x 7.4%

75th Percentile $2,264.1 $3,991.0 $4,432.0 $1,065.7 $372.9 24.6% 7.6% 0.7x 13.8x 31.5%

Homebuilders

Beazer Homes USA, Inc. $512.6 $1,659.3 $1,949.5 $326.4 $87.7 16.7% 4.5% 0.9x 18.9x 10.7%

D.R. Horton, Inc. $16,480.4 $19,016.1 $14,519.5 $2,962.2 $1,752.2 20.4% 12.1% 1.3x 10.9x 18.8%

KB Home $2,476.5 $4,275.8 $4,421.6 $771.0 $332.4 17.4% 7.5% 1.0x 12.9x 20.4%

Lennar Corporation $18,738.2 $24,291.0 $13,289.7 $2,727.6 $1,439.7 20.5% 10.8% 1.8x 16.9x 18.1%

M/I Homes, Inc. $887.7 $1,544.4 $1,962.0 $398.2 $154.3 20.3% 7.9% 0.8x 10.0x 17.3%

M.D.C. Holdings, Inc. $1,569.6 $2,161.0 $2,577.6 $468.8 $186.6 18.2% 7.2% 0.8x 11.6x 15.0%

Meritage Homes Corporation $1,838.5 $2,951.6 $3,241.0 $595.3 $266.3 18.4% 8.2% 0.9x 11.1x 14.1%

NVR, Inc. $10,261.9 $10,212.8 $6,320.2 $1,262.2 $892.6 20.0% 14.1% 1.6x 11.4x 12.4%

PulteGroup, Inc. $8,439.2 $11,679.4 $8,573.3 $2,031.5 $1,176.0 23.7% 13.7% 1.4x 9.9x 13.8%

Toll Brothers, Inc. $6,566.3 $9,593.7 $6,069.8 $1,320.8 $718.3 21.8% 11.8% 1.6x 13.4x 13.8%

Beazer Homes USA, Inc. $512.6 $1,659.3 $1,949.5 $326.4 $87.7 16.7% 4.5% 0.9x 18.9x 10.7%

25th Percentile $1,636.8 $2,358.6 $2,743.5 $500.4 $206.5 18.2% 7.6% 0.9x 10.9x 13.8%

Median $4,521.4 $6,934.8 $5,245.7 $1,016.6 $525.4 20.1% 9.5% 1.1x 11.5x 14.6%

75th Percentile $9,806.2 $11,312.8 $8,010.0 $1,853.8 $1,105.2 20.5% 12.0% 1.5x 13.2x 17.9%

7

Cherry Tree Building Products Index





HVAC

AAON, Inc. $2,044.9 $2,014.5 $405.2 $123.4 $89.9 30.5% 22.2% 5.0x - 4.4%

Daikin Industries,Ltd. $32,310.5 $34,235.3 $19,939.1 $6,976.1 $3,011.7 35.0% 15.1% 1.7x 11.4x 6.1%

Ingersoll-Rand Plc $21,368.0 $23,949.2 $14,197.6 $4,432.8 $2,051.7 31.2% 14.5% 1.7x 11.7x 3.3%

Lennox International Inc. $8,415.3 $9,351.1 $3,839.6 $1,125.2 $550.6 29.3% 14.3% 2.4x 17.0x 4.5%

25th Percentile $6,822.7 $7,516.9 $2,981.0 $874.7 $435.4 30.2% 14.4% 1.7x 11.5x 4.1%

Median $14,891.7 $16,650.2 $9,018.6 $2,779.0 $1,301.2 30.8% 14.8% 2.1x 11.7x 4.4%

75th Percentile $24,103.7 $26,520.7 $15,633.0 $5,068.6 $2,291.7 32.2% 16.9% 3.1x 14.3x 4.9%

Roofing, Siding & Insulation

Continental Building Products, Inc. $1,068.9 $1,261.7 $489.2 $127.3 $136.0 26.0% 27.8% 2.6x 9.3x 4.8%

James Hardie Industries plc $7,764.4 $8,308.7 $2,022.9 $700.4 $455.1 34.6% 22.5% 4.1x 18.3x 7.6%

Kingspan Group plc $7,608.0 $8,256.0 $4,404.5 $1,264.0 $534.6 28.7% 12.1% 1.9x 15.4x 24.7%

Owens Corning $8,981.8 $11,187.8 $6,384.0 $1,597.0 $1,135.0 25.0% 17.8% 1.8x 9.9x 6.7%

ROCKWOOL International A/S $6,111.4 $5,802.0 $2,860.7 $1,880.9 $493.9 65.7% 17.3% 2.0x 11.7x 2.9%

USG Corporation $5,664.1 $6,286.1 $3,204.0 $665.0 $499.0 20.8% 15.6% 2.0x 12.6x 3.3%

25th Percentile $5,775.9 $5,923.0 $2,232.4 $673.9 $464.8 25.3% 16.0% 1.9x 10.3x 3.7%

Median $6,859.7 $7,271.1 $3,032.4 $982.2 $496.4 27.4% 17.5% 2.0x 12.2x 5.8%

75th Percentile $7,725.3 $8,295.5 $4,104.4 $1,513.8 $525.7 33.1% 21.3% 2.4x 14.7x 7.4%

Windows & Doors

Deceuninck NV $486.9 $635.9 $825.1 $236.2 $81.8 28.6% 9.9% 0.8x 7.8x 7.5%

JELD-WEN Holding, Inc. $3,256.8 $4,310.3 $3,763.9 $848.2 $367.6 22.5% 9.8% 1.1x 11.7x 2.4%

Masonite International Corporation $1,717.9 $2,180.2 $2,032.9 $407.0 $237.7 20.0% 11.7% 1.1x 9.2x 3.4%

PGT Innovations, Inc. $928.9 $1,107.8 $511.1 $161.1 $80.3 31.5% 15.7% 2.2x 13.8x 18.6%

Quanex Building Products Corporation $610.4 $832.8 $863.1 $191.5 $93.4 22.2% 10.8% 1.0x 8.9x 13.1%

Tyman plc $812.8 $1,041.7 $706.5 $258.0 $118.9 36.5% 16.8% 1.5x 8.8x 14.2%

Deceuninck NV $486.9 $635.9 $825.1 $236.2 $81.8 28.6% 9.9% 0.8x 7.8x 7.5%

25th Percentile $661.0 $885.0 $736.2 $202.7 $84.7 22.3% 10.1% 1.0x 8.8x 4.4%

Median $870.8 $1,074.8 $844.1 $247.1 $106.1 25.6% 11.3% 1.1x 9.0x 10.3%

75th Percentile $1,520.7 $1,912.1 $1,740.5 $369.7 $208.0 30.8% 14.7% 1.4x 11.1x 13.9%

Plumbing & Cabinetry

American Woodmark Corporation $1,723.2 $2,472.0 $1,103.1 $230.1 $135.5 20.9% 12.3% 2.2x 18.2x 11.0%

Fortune Brands Home & Security, Inc. $8,716.8 $9,903.0 $5,283.3 $1,939.7 $851.6 36.7% 16.1% 1.9x 11.6x 9.6%

Masco Corporation $12,673.6 $14,692.6 $7,644.0 $2,611.0 $1,296.0 34.2% 17.0% 1.9x 11.3x 2.9%

Toto Ltd. $8,935.7 $8,399.3 $5,267.8 $2,007.1 $634.2 38.1% 12.0% 1.6x 13.2x 0.0%

25th Percentile $6,968.4 $6,917.5 $4,226.6 $1,512.3 $509.5 30.8% 12.2% 1.8x 11.6x 2.2%

Median $8,826.2 $9,151.1 $5,275.5 $1,973.4 $742.9 35.4% 14.2% 1.9x 12.4x 6.3%

75th Percentile $9,870.1 $11,100.4 $5,873.5 $2,158.1 $962.7 37.1% 16.3% 2.0x 14.5x 9.9%

8

Cherry Tree Building Products IndexAs of April 1, 2018





Floors & Surfaces

Armstrong Flooring, Inc. $349.4 $396.4 $1,133.7 $199.7 $55.6 17.6% 4.9% 0.3x 7.1x (2.4%)

Interface, Inc. $1,495.3 $1,638.2 $996.4 $386.0 $147.4 38.7% 14.8% 1.6x 11.1x (0.2%)

Mohawk Industries, Inc. $17,283.1 $19,999.1 $9,491.3 $3,045.7 $1,863.1 32.1% 19.6% 2.1x 10.7x 6.7%

Tarkett S.A. $2,126.2 $2,734.9 $3,411.5 $846.1 $133.3 24.8% 3.9% 0.8x - 5.6%

25th Percentile $1,208.8 $1,327.8 $1,099.4 $339.4 $113.9 23.0% 4.7% 0.7x 8.9x (0.8%)

Median $1,810.8 $2,186.6 $2,272.6 $616.0 $140.3 28.4% 9.8% 1.2x 10.7x 2.7%

75th Percentile $5,915.4 $7,051.0 $4,931.5 $1,396.0 $576.3 33.8% 16.0% 1.8x 10.9x 5.9%

Lumber & Wood Products

Canfor Corporation $2,931.4 $3,216.1 $3,714.9 $1,292.3 $633.7 34.8% 17.1% 0.9x 5.1x 11.6%

Louisiana-Pacific Corporation $4,172.7 $3,620.6 $2,733.9 $851.9 $656.6 31.2% 24.0% 1.3x 5.5x 12.2%

Norbord Inc. $3,131.2 $3,429.8 $2,177.0 $678.0 $667.0 31.1% 30.6% 1.6x 5.1x 10.8%

Trex Company, Inc. $3,200.5 $3,170.0 $565.2 $243.4 $159.7 43.1% 28.3% 5.6x 19.8x 13.0%

Universal Forest Products, Inc. $1,986.0 $2,118.3 $3,941.2 $542.8 $234.0 13.8% 5.9% 0.5x 9.1x 14.0%

West Fraser Timber Co. Ltd. $5,170.4 $5,463.5 $4,093.8 $1,602.8 $856.4 39.2% 20.9% 1.3x 6.4x 10.0%

Weyerhaeuser Company $26,463.4 $32,142.4 $7,197.0 $1,899.0 $1,944.0 26.4% 27.0% 4.5x 16.5x 9.5%

25th Percentile $3,031.3 $3,193.0 $2,455.5 $610.4 $433.8 28.8% 19.0% 1.1x 5.3x 10.4%

Median $3,200.5 $3,429.8 $3,714.9 $851.9 $656.6 31.2% 24.0% 1.3x 6.4x 11.6%

75th Percentile $4,671.5 $4,542.1 $4,017.5 $1,447.6 $761.7 37.0% 27.6% 3.0x 12.8x 12.6%

Cement, Concrete & Aggregates

Boral Limited $6,706.8 $8,520.2 $4,087.8 $1,284.3 $554.6 31.4% 13.6% 2.1x 15.4x 6.6%

CEMEX, S.A.B. de C.V. $9,991.1 $23,387.6 $13,149.5 $4,513.2 $2,434.8 34.3% 18.5% 1.8x 9.6x 8.9%

CRH plc $28,573.0 $36,392.4 $30,283.4 $9,986.8 $3,775.2 33.0% 12.5% 1.2x 9.6x 10.1%

Eagle Materials Inc. $5,015.3 $5,559.4 $1,380.5 $338.9 $417.3 24.5% 30.2% 4.0x 13.3x 10.2%

HeidelbergCement AG $19,487.2 $32,042.9 $20,744.2 $12,647.0 $3,490.0 61.0% 16.8% 1.5x 9.2x 11.0%

LafargeHolcim Ltd $32,756.7 $51,207.2 $26,811.1 $7,984.1 $5,636.0 29.8% 21.0% 1.9x 9.1x 9.6%

Martin Marietta Materials, Inc. $13,019.1 $14,602.8 $3,721.4 $971.9 $999.5 26.1% 26.9% 3.9x 14.6x 11.6%

Summit Materials, Inc. $3,341.9 $4,822.8 $1,932.6 $650.8 $421.7 33.7% 21.8% 2.5x 11.4x 17.1%

U.S. Concrete, Inc. $1,016.0 $1,708.4 $1,336.0 $280.7 $167.4 21.0% 12.5% 1.3x 10.2x 23.8%

Vulcan Materials Company $15,110.2 $17,823.4 $3,890.3 $1,000.6 $951.3 25.7% 24.5% 4.6x 18.7x 9.1%

25th Percentile $5,438.2 $6,299.6 $2,379.8 $731.1 $454.9 25.8% 14.4% 1.6x 9.6x 9.2%

Median $11,505.1 $16,213.1 $3,989.0 $1,142.4 $975.4 30.6% 19.8% 2.0x 10.8x 10.1%

75th Percentile $18,392.9 $29,879.1 $18,845.5 $7,116.4 $3,226.2 33.5% 23.8% 3.6x 14.3x 11.4%

9

Cherry Tree Building Products IndexAs of April 1, 2018

ABOUT CHERRY TREE

History and BackgroundCherry Tree is a private investment banking and wealth management firm headquartered in Minneapolis, Minnesota. Our firm specializes in serving middle market companies and their owners, whether private, public, or divisions of larger corporations. Founded in 1980, Cherry Tree managed several successful institutional private funds focusing on platform acquisitions. Those funds led to more than 300 financings, 26 public offerings, and 41 strategic sales. In 1996 the firm diversified into investment banking services to take advantage of our long history and position in the market. In 2003 we added wealth management to our operations by acquiring and growing our existing business. Our professionals collectively have been members of more than 80 boards of directors, worked with more than 250 different companies, and advised on hundreds of financings and M&A transactions.

Broad Market ExpertiseCherry Tree has been working with middle market companies for more than 35 years. Our core M&A activity is sell-side engagements with middle market companies where ownership wants to achieve some liquidity goals or desires to recapitalize its business to better position the company for future growth. Additionally, we represent buy-side clients attempting to add acquisition strategies to complement their organic growth efforts. We are experts in the capital markets, having previously managed four private funds. Our firm primarily has been focused on investment banking transactions since 1996 and has an exceptional team of dedicated investment banking professionals. Most of our managing directors have had C-level operating experience with backgrounds as CEOs or CFOs. Collectively, they represent more than 200 years of transaction and operating experience.

ResearchWe distinguish our firm by conducting comprehensive research and publishing our findings in reports that provide in-depth analyses of selected industries and overall market conditions. For each client assignment, we apply our internal research capabilities and our deep domain expertise in relevant markets in order to provide the highest value to our clients. Some of our industry research is sponsored by our clients with an interest in specific industry segments.

Contacting Cherry TreeFor more information, please contact one of our professionals listed below, or visit us at www.cherrytree.com.

Dave Latzke Ben Ikeda James DohnalekManaging Director, Partner Senior Associate Analyst

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© Cherry Tree & Associates | 2018

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Important Disclosures

The information included in this publication has been obtained from public sources, and is not based upon private or confidential Cherry Tree information. Cherry Treegathers its data from sources it considers reliable. However, it does not guarantee the accuracy or completeness of the information provided within this publication. Anyopinions presented reflect the current judgment of the authors and are subject to change. Cherry Tree makes no warranties, expressed or implied, regarding the accuracy ofthis information or any opinions expressed by the authors. Officers, directors, partners of Cherry Tree and Cherry Tree proprietary investment funds may have positions in thesecurities of the companies discussed, and certain affiliates of Cherry Tree may recommend to specific clients the purchase and sale of securities discussed in thepublication. This publication does not constitute a recommendation with respect to the securities of any company discussed herein, and it should not be construed as such.Cherry Tree or its affiliates may from time to time provide investment banking or related services to these companies. Like all Cherry Tree employees, the authors of thispublication receive compensation that is affected by overall firm profitability. We undertake no obligation to update any information in this publication. 

The Building Products Index is a hypothetical index, and does not reflect an actual investment portfolio. Comparisons between the Building Products Index and other indicesare for illustrative purposes only.  Correlations in performance information for the Building Products Index and other indices should not be relied upon as indicative of risksinvolved in owning or holding a portfolio of securities similar to the Building Products Index. Past performance should not be relied upon as indicative of future performance.

Documents

Building Products Industry - Cherry Tree & Associates · expressed interest in revising the North American Free Trade Agreement (NAFTA), a trade deal between the U.S., Canada, and