Rock Products

APR 2017

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www.rockproducts.com ROCK products • April 2017 • 35 Select Merger and Acquisition Activity Acquisition activity rebounded in Q4 2016 after a slow Q3 (Figure 4) and the number of transactions completed (32) in the U.S. and Canada was consistent with Q4 2015. Glass transactions were common during the quarter and included the sale of Guardian Industries to Koch Industries and the sale of J.E. Berkowitz to Consolidated Glass Holdings, a hold- ing company of Grey Mountain Partners. 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 private equity firm contributors on the number of completed trans- actions. Figure 5 (page 32) provides the number of completed transactions from GF Data contributors, the average EBITDA multiple and the average amount of debt utilized in the trans- action computed as a multiple of EBITDA. The data, although not industry specific, shows valuations consistent with prior periods but debt levels have declined. Industry Spotlight A November 2016 report by TRIP, a nonprofit research organization that distributes economic and technical data on highway transportation issues, highlighted the expanding need for infrastructure repair in the U.S. "Nearly one-third of the nation's major urban roadways – highways and major streets that are the main routes for commuters and commerce – are in poor condition. These critical links in the nation's transportation system carry 70 percent of the approximately 3.1 trillion miles driven annu- ally in America." The report also states an additional 39 percent of the nation's major urban roads and highways have pavement that is in medi- ocre or fair condition, and only 28 percent are in good condition. Company Spotlight International and domestic aggregates providers experi- enced positive results in revenue and margins in Q4 2016. Vulcan Materials recently reported Q4 2016 financial results. During the quarter, total revenue increased 2.0 percent and on a full-year basis revenue growth was 5.0 percent. Adjusted EBITDA was down 6.0 percent for the quarter but increased by 16.0 percent for the full year as compared to 2015. In Q4, Vulcan signed purchase agreements for four acquisitions that include both aggregates and asphalt assets. Since 2013, the company has completed 15 transactions that position it to further strengthen its customer service capabilities and cash flows. Martin Marietta recently reported record results for Q4 2016 and full-year 2016. The quarterly press release stated, "We are highly confident that a durable, multi- year construction recovery is now underway, consistent with third-party forecasts … We are encouraged by the Figure 4: Q4 Industry M&A Activity Transaction Date Target/Issuer Buyers/Investors Transaction Value ($mm) 01/05/2017 Everist Materials LLC Summit Materials, Inc. Undisclosed 12/23/2016 Consolis Service Co SA NV Bain Capital Private Equity, LP Undisclosed 12/21/2016 ForzaStone LLC Home Brands Group LLC Undisclosed 12/19/2016 (Announced) Pittsburgh Glass Works LLC /OEM Glass Manufacturing Bus/ Vitro SAB de CV 310.0 12/07/2016 Anchor Glass Con- tainer Corp. CVC Capital Partners Ltd.; BA Glass BV; Ocelot Acquisition, Inc. 1,000.0 12/02/2016 (Announced) Cemex Concretos SA de CV /Concrete Pumping Assets/ Pumping Team SLL 109.0 12/01/2016 (Announced) Xella International GmbH Lone Star Funds Undisclosed 12/01/2016 Giant Cement Holding, Inc. (Acquired 55% stake) Elementia SAB de CV 220.0 11/30/2016 Plant and Eight Ter- minals in U.S. from Lehigh Hanson, Inc. and Essroc Corp., subsidiaries of Hei- delbergCement Argos USA Corporation 660.0 11/28/2016 Top Master, Inc. O2 Investment Partners; Tecum Capital Manage- ment; Oakland Standard Co.; Clio Holdings Undisclosed 11/28/2016 (Announced) CEMEX SAB de CV / Reinforced Concrete Pipe Unit Quikrete Holdings, Inc. 540.0 11/21/2016 (Announced) Guardian Indus- tries Corp. (Acquired 55.5% stake) Koch Industries, Inc. Undisclosed 11/20/2016 (Announced) Headwaters Incorpo- rated (NYSE:HW) Boral Industries, Inc. 2,629.7 11/18/2016 CEMEX, S.A.B. de C.V., Certain assets in U.S. Grupo Cementos de Chi- huahua, S.A.B. de C.V. 306.0 11/02/2016 J.E. Berkowitz, LP Consolidated Glass Hold- ings, Inc. Undisclosed 11/01/2016 Brock White Co. LLC The Sterling Group LP Undisclosed 10/14/2016 J&G Concrete Opera- tions, LLC Hanson Pipe & Precast LLC 32.0 10/13/2016 RBC Tile & Stone, LLC Virginia Tile Company Undisclosed 10/04/2016 ESSROC Canada, Inc. Lehigh Hanson Materials Limited 281.9 Sources: S&P Capital IQ and FactSet

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