Rock Products

MAY 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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26 • ROCK products • May 2018 Capstone Update 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 201 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 spe- cific, shows valuations increasing to record levels during the quarter. Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 # of Transactions 68 50 76 36 58 62 51 49 68 TEV/EBITDA 6.6x 6.5x 7.1x 6.6x 6.7x 6.6x 7.3x 7.5x 8.1x Total Debt/EBITDA 3.9x 4.4x 4.0x 3.8x 3.7x 3.9x 4.3x 4.6x 4.4x Senior Debt/EBITDA 2.7x 2.8x 3.3x 3.2x 2.8x 3.1x 3.6x 3.8x 3.5x Figure 4: Private Equity Valuations & Leverage Source: GF Data COMPANY SPOTLIGHT Cemex S.A.B. de C.V. Ownership: Publicly Traded (Ticker: CX) Headquarters: San Pedro Garza García, Mexico Markets: Construction Materials FY 2017 Revenue: $13.7 Billion Company Description: Cemex experienced an increase of 4 percent in consolidated net sales for Q4 and a 3 percent increase for the full-year 2017. The increase in sales is mainly attributable to higher product prices. But, despite the increase in sales, operating EBITDA on a like-to-like basis decreased by 6 percent for the year. Fernando A. Gonzalez, chief executive officer, said, "Although 2017 was a challenging year, our two largest markets, Mexico and the United States, performed well with like-to- like increases in their EBITDA. We also generated free cash flow after maintenance capex of close to $1.3 billion, with a 50 percent EBITDA-to-free-cash-flow conversion rate and which, together with our asset-divestment initiatives, resulted in pro-forma debt reduction of close to $2.1 billion during the year. We had important headwinds during the year: underperformance in Columbia, Egypt and the Phil- ippines as well as increased energy costs, mainly in Mexico. As we have done in the past, we focused on the variables we control to dampen these headwinds and we continued to deliver solid results." In the U.S., volume for Cemex's three core products (domes- tic gray cement, ready-mix, aggregates) increased during Q4 on a like-to-like basis, despite notable precipitation and the aftermath of the hurricane in Florida. A great deal of the increase was due to accelerated activity in single-fam- ily construction and improvements. Cemex also reported an increase in the industrial- and-commercial sector, boosting total operating EBITDA in the U.S. on a like-to-like basis by 9 percent. 1 HeidelbergCement Group Ownership: Publicly Traded (Ticker: HEI.DE) Headquarters: Heidelberg, Germany Markets: Construction Materials FY 2017 Revenue: $17.3 billion Company Description: HeidelbergCement completed a record year in 2017 with double digit growth in sales volume for cement (22.3 percent), aggregates (12.2 percent) and ready-mixed con- crete (11 percent). Asphalt volume growth lagged but still outpaced 2016 with growth of 2.8 percent. Much of this

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