Rock Products

FEB 2019

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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34 • ROCK products • February 2019 Company Spotlight Net sales for LafargeHolcim on a like-for-like basis grew 5.8 percent in Q3 and by 5.1 percent for the first nine months of 2018 when compared to the prior-year period. All four business segments (cement, aggregates, ready-mix concrete and solutions and products) contributed to the sales increase. Recur- ring EBITDA growth outpaced sales at 8.1 percent in Q3 overcoming steep cost inflation in energy and logistics through volume growth and the effectiveness of its pricing and efficiency programs. The LafargeHolcim Q3 earnings report offered the following outlook. "The accelerated sales growth and over-proportional increase in Recurring EBITDA demonstrates the strength of Strategy 2022 – 'Building for Growth'. This positive momentum is expected to continue in Q4 with the following underlying market trends: • Continued growth in North America. • Softer cement demand in Latin America. • Strong markets in Europe. • Challenging but stabilizing conditions in Middle East Africa. • Continued demand growth in Asia. Based on the above trends and positive momentum, the Net Sales guidance for 2018 is adjusted upwards to 4 to 6 percent on a like-for-like basis (compared to 3 to 5 percent as previously guided)." 1 Buzzi Unicem reported an increase in year-to-date cement volume through Q3 of 3.1 per- cent while ready-mixed concrete was down 1.8 percent compared to the prior-year period. In the first nine months of 2018, sales volumes achieved by the group were higher than the level achieved in the previous year, thanks to changes in the scope of consolidation in Italy and Germany and the progress achieved in the Czech Republic, Poland and Russia. The U.S. market was negatively impacted by unprecedented rainfall, especially in September, and activity in Ukraine was significantly lower than in the prior year. In the U.S., cement deliveries ran smoothly until August, but record levels of rainfall throughout the month of September in the Northeast, Texas and parts of the Midwest resulted in some of the lowest production figures on record and YTD revenue declined 7.2 percent compared to the prior-year period. 2 Notable Transaction Asphalt Plants & Paving Division of Lane ConstrucƟon acquired by Eurovia (VINCI) (Aug. 20, 2018) Eurovia signed an agreement with Salini Impregilo Group to acquire the Lane Asphalt Plants & Paving division of its subsidiary Lane Construction, for a total consideration of $555 million. These operations, based in 10 states on the East Coast and in Texas, generate more than $600 million in annual revenue and include approximately 40 asphalt-production plants and several quarries. The acquisition complements Eurovia's current operations in the United States where its sub- sidiaries Hubbard Construction and Blythe Construction operate in the southeastern states of Florida, Georgia, North and South Carolina. As a result of this acquisition, subject to regulatory approval in the United States, Eurovia will become one of the larger asphalt producers on the East Coast with total revenue of about $1.2 billion dollars. 3 Figure 4: Private Equity ValuaƟons & Leverage Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 # of TransacƟons 36 57 67 58 53 71 67 47 63 TEV/EBITDA 6.6x 6.8x 6.6x 7.2x 7.5x 8.0x 6.7x 7.4x 7.3x Total Debt/EBITDA 3.8x 3.7x 4.0x 4.2x 4.4x 4.3x 4.1x 3.9x 3.8x Senior Debt/EBITDA 3.2x 2.8x 3.0x 3.6x 3.6x 3.4x 3.3x 3.2x 2.8x Source: GF Data Aggregate Industry Market Report Acquires Asphalt Plants & Paving Division of

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