Rock Products

JAN 2018

Rock Products is the aggregates industry's leading source for market analysis and technology solutions, delivering critical content focusing on aggregates-processing equipment; operational efficiencies; management best practices; comprehensive market

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www.rockproducts.com ROCK products • January 2018 • 27 Company Spotlight U.S. Concrete Q3 2017 results reflected new quarterly highs for both revenue and Adjusted EBITDA. Revenue from the company's largest division, ready- mixed concrete increased 8.6 percent compared to the same quarter in 2016. Despite three significant hurricanes and one of the wettest summers on record in Texas, the com- pany's strength as a market leader were validated by Q3 performance. William Sandbrook, president and CEO, said, "Our market strategy continues to prove successful and has enabled us to achieve our 27th straight quarter of year-over-year revenue growth and 26th straight quarter of ready-mixed concrete pricing growth. We remain very optimistic for the future as the economic fundamentals across all of our markets continue to indicate a very positive outlook. Our ready-mixed concrete backlog has grown 7.7 percent since the beginning of the year and we are optimistic about the growth prospects in our markets with construction spending expected to outpace the Select Merger and Acquisition Activity Preliminary estimates of total acquisition activity (Figure 3) in Q3 2017 demonstrate a decrease of 13.8 percent com- pared to the same period in 2016 in terms of the number of aggregates related transactions completed (25) in the U.S. and Canada. Conversely, transaction activity was down 32.4 percent compared to Q2 2017 but generally several trans- actions are identified and added before figures are finalized which will result in less, but still significant, overall decline. Publicly traded aggregates producers were notably active during the quarter including U.S. Concrete, CRH plc and Summit Materials. Private Equity Transaction Activity and Valuations GF Data Resources, a provider of detailed information on business transactions ranging in size from $10 million to $250 million, provides quarterly data from over 200 pri- vate equity firm contributors on the number of completed transactions. Figure 4 provides the number of completed transactions from GF Data contributors, the average Total Enterprise Value (TEV)/EBITDA multiple and the average amount of debt utilized in the transaction computed as a multiple of EBITDA. The data, although not industry specific, shows valuations and debt levels increasing to record levels during the quarter. Figure 4: Private Equity Valuations & Leverage All Transactions Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 # of Transactions 45 68 50 76 36 58 62 51 49 TEV/EBITDA 7.0x 6.6x 6.5x 7.1x 6.6x 6.7x 6.6x 7.3x 7.5x Total Debt/EBITDA 4.0x 3.9x 4.4x 4.0x 3.8x 3.7x 3.9x 4.3x 4.6x Senior Debt/EBITDA 3.1x 2.7x 2.8x 3.3x 3.2x 2.8x 3.1x 3.6x 3.8x Source: GF Data Resources

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