Building Products & Materials Industry Update

BUILDING PRODUCTS & MATERIALS INDUSTRY UPDATE │ JULY 2015

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Investment banking services are provided by Harris Williams LLC, a registered broker-dealer and member of FINRA and SIPC, and Harris Williams & Co. Ltd, which is authorised and regulated by the Financial Conduct Authority. Harris Williams & Co. is a trade name under which Harris Williams LLC and Harris Williams & Co. Ltd conduct business.

0 BUILDING PRODUCTS & MATERIALS INDUSTRY UPDATE │ JULY 2015 BUILDING PRODUCTS & MATERIALS GROUP OVERVIEW

CONTENTS INTRODUCTION . WHAT WE’RE READING Harris Williams & Co. is pleased to present our Building Products and Materials . ECONOMIC UPDATE Industry Update for July 2015. This report provides commentary and analysis on . M&A MARKET TRENDS current capital market trends and merger and acquisition dynamics within the . PUBLIC MARKETS global building products and materials industry. . PUBLIC COMPARABLES . M&A ACTIVITY We hope you find this edition helpful and encourage you to contact us directly if you would like to discuss our perspective on current industry trends and M&A opportunities or our relevant industry experience.

OUR PRACTICE CONTACTS Mike Hogan Harris Williams & Co. is a leading advisor to the building products and materials Managing Director industry. Our significant experience covers a broad range of end markets, [email protected] industries, and business models. +1 (804) 915-0104

Distribution & Construction Ryan Nelson Building Products Managing Director Services Materials [email protected] . Acoustical . Roofing . Architectural and . Aggregates +1 (804) 915-0121 . Cabinets and . Siding . Engineering . Asphalt . Countertops . Tools and Hardware . Installation and . Aluminum Trey Packard . Carpet and Flooring . Windows and Doors . Contracting . Bricks Vice President . Gypsum / Wallboard . Lumber and . Clay [email protected] . Electrical Fixtures . Hardware . Glass +1 (804) 887-6016 . HVAC . Plumbing . Precast Concrete / . Lumber . Roofing and Siding Ready Mix . Plumbing Fixtures . Site Development . Steel . Wallboard . Stone

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PAGE | 1 BUILDING PRODUCTS & MATERIALS INDUSTRY UPDATE │ JULY 2015 WHAT WE’RE READING

HOUSING STARTS IN U.S. SURGE TO SECOND-HIGHEST LEVEL SINCE 2007

Bloomberg 7/17/2015 New-home construction in the U.S. climbed in June to the second-highest level since November 2007 as builders stepped up work on apartment projects. Housing starts rose 9.8 percent to a 1.17 million annualized rate from a revised 1.07 million in May that was stronger than previously estimated, figures from the Commerce Department showed Friday in Washington. The median estimate of economists surveyed by Bloomberg was a 1.11 million rate. Ground-breaking on multifamily dwellings jumped 29.4 percent. Building permits for single and multifamily properties, a gauge of future construction, climbed to an almost eight-year high, the report showed. Steady job gains, low mortgage rates and a gradual easing of lending standards are propelling sales, indicating housing will become a bigger source of strength for the economy. Read the full article here. JUNE HOUSING MARKET SETS ALL-TIME RECORDS FOR HIGH SPEED AND LOW SUPPLY

Redfin 7/16/2015 U.S. Home sales increased 11.4 percent in June compared to the same time last year, leaving buyers with the lowest supply of homes for sale on record. At the current pace of demand, there are only 3.5 months of home inventory left. Six months of inventory is considered a balanced market. June was also the fastest market we’ve ever seen, with median days on market falling to 26, breaking the record of 27 days set in June of 2013. Despite high buyer demand and low inventory, price growth is still moderate at 5.1 percent year over year in June. Read the full article here.

PICK-UP PROJECTED IN HOME IMPROVEMENT ACTIVITY MOVING INTO 2016

Joint Center for Housing Studies of Harvard University 7/16/2015 The extended easing of gains in residential improvement spending is expected to change course by early next year, according to the Leading Indicator of Remodeling Activity (LIRA) released today by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University. The LIRA projects annual spending growth for home improvements will accelerate to 4.0% by the first quarter of 2016. “A major driver of the anticipated growth in remodeling spending is the recent pick up in home sales activity,” says Chris Herbert, Managing Director of the Joint Center. “Recent homebuyers typically spend about a third more on home improvements than non-movers…” Read the full article here.

TD BANK: FIRST-TIME HOMEBUYERS ON THE UPSWING IN FLORIDA AND NATIONWIDE

South Florida Business Journal 7/16/2015 Debt and stagnant wages cut the number of first-time homebuyers during the recession, but a new survey from TD Bank indicates that’s changing. The survey shows nearly one in five potential first-time homebuyers are actively looking to buy. About 62 percent of potential first-time buyers expect to purchase a home within the next two years; among millennials, ages 18-to-34 years old, that number rises to 67 percent. TD Bank polled more than 1,000 Americans looking to buy their first home within the next five years. Results in Florida mirror those nationwide, said Brian Betzler, Florida mortgage sales manager. First-time homebuyers play a critical role in the housing market because they allow existing homebuyers to sell their homes and trade up, triggering a cascade of home sales…”. Read the full article here.

ITS OFFICIAL: HOLCIM AND LAFARGE MERGE Concrete Construction 7/10/2015 Holcim Ltd and Lafarge S.A. completed their global merger on July 10 and have launched LafargeHolcim, a world leader in the building materials industry. All conditions for the completion of the merger have been fulfilled following the successful completion of the public exchange offer and the issuance of new Holcim shares to Lafarge shareholders. Holcim’s shareholders had previously approved the merger-related resolutions at an Extraordinary General Meeting on May 8. Read the full article here.

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PAGE | 2 BUILDING PRODUCTS AND MATERIALS INDUSTRY UPDATE │ JULY 2015 ECONOMIC UPDATE

GDP

(Change in billions of dollars) . Real GDP decreased by 0.2% in the first quarter of 2015, but overall GDP increased 1.5% 2.9% since Q1 2014 1.0% . This decrease reflecs a deceleration in PCE and downturns in exports, nonresidential fixed investment, and in state and local 0.5% government spending that were partly offset by upturns in private inventory investment and federal government 0.0% spending and a deceleration in imports (0.5%) . Current dollar GDP also decreased 0.2%, or $10.4 billion in the first quarter to a level of $17.7 trillion (1.0%)

. The Gross Domestic Income (GDI), which (1.5%) measures the value of the production of goods and services in the U.S. as the costs incurred and the incomes earned in (2.0%) production, increased 1.9% in the first Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 quarter of 2015 2007 2008 2009 2010 2011 2012 2013 2014 2015

Seasonally Adjusted Source: Bureau of Economic Analysis

INDUSTRIAL PRODUCTION INDEX

(Indexed to 2007) . Industrial production increased 0.3% in June but fell at an annual rate of 1.4% for the second quarter of 2015 110 105.7% . At 105.7% of its 2007 average, total industrial 108 production in June was 1.5% above its prior- year level 106 104 . Capacity utilization for the industrial sector increased 0.2% in June to 78.4%, a rate that 102 is 1.7% below its long-run (1972-2014) average 100

. Manufacturing output was unchanged, 98 motor vehicles and parts fell 3.7%, and the indexes for mining and utilities advanced 96 1% and 1.5% respectively 94 . The production indexes for consumer goods and for construction supplies were unchanged in June, but the indexes for the other major market groups each rose about 0.5%

Seasonally Adjusted Source: Board of Governors of the Federal Reserve System

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PAGE | 3 BUILDING PRODUCTS AND MATERIALS INDUSTRY UPDATE │ JULY 2015 ECONOMIC UPDATE

PERSONAL CONSUMPTION EXPENDITURES

. In May, personal income increased $79.0 (percentage change in 6-month rolling average) billion, or 0.5%, while personal consumption expenditures (PCE) 0.60% increased $105.9.8 billion, or 0.9%

. Wages and salaries increased $37.1 0.50% billion in May, compared to an increase of $21.6 billion in April 0.40% . Purchases of durable goods increased 2.3%, compared to a decrease of .1% in the previous month; while purchases of non-durable goods increased .9%, 0.30% compared to a decrease of .3% in April

0.20%

0.10%

0.00%

Source: The Federal Reserve Bank of St. Louis

ECONOMIC SENTIMENT

. The economic sentiment index measures (indexed to 2010) how consumers view prospects for their own financial situation, how they view the near-term general economy prospects, and their long-term view of economic 128 prospects

. The Leading Economic Index (LEI) for the U.S. improved in May by .7% to 123.1, 121 following a .7% increase in April and a .4% increase in March

. For the six months ending May 2015, the 114 leading economic index increased 1.9% (approximately a 4% annual rate), slower than the growth of 2.6% during the previous six months 107 . The continued rise in LEI confirms the outlook for more economic expansion in the last half of 2015, and the growth in residential construction and consumer 100 expectations supports this view Jun-12 Oct-12 Feb-13 Jun-13 Oct-13 Feb-14 Jun-14 Oct-14 Feb-15

Indexed to 2010 Source: The Conference Board

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CONSUMER CONFIDENCE INDEX (CCI)

. The Consumer Confidence Index 120 improved to 101.4 in June, up 7.2% from 94.6 in May 100 . Consumer confidence is currently down (2.3%) over the last six months, but 17.4% higher than June 2014 80

. Over the past two months consumers have grown confident about the current 60 state of business and employment conditions 40 . Consumers’ assessment of current conditions improved again in June – those claiming business conditions are “good” increased from 24.7% to 26.4% 20 and were more positive about the job market 0

Indexed to 1985 Source: The Conference Board

KEY INTEREST RATES

. The 30-year mortgage rate increased in June 2015 to 3.98% 8.0% 7.0% . The current mortgage rate is 14 basis points lower than the rate from June 2014 6.0%

. The Fed has indicated that it plans to 5.0% increase rates in the second half of 2015, which have been kept near zero since 4.0% 2008 3.0%

2.0%

1.0%

0.0%

30-Yr Mortgage Rates 10-Yr Treasury Effective Federal Funds Rate

Seasonally Adjusted Source: Federal Reserve Bank of St. Louis

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PAGE | 5 BUILDING PRODUCTS AND MATERIALS INDUSTRY UPDATE │ JULY 2015 ECONOMIC UPDATE

U.S. NON-RESIDENTIAL CONSTRUCTION

. Non-residential construction has lagged ($ in billions) in recovery compared to other construction markets, and is still $750 12.0% significantly below historical peak levels

. Non-residential construction increased $700 8.0% from March to April by 3.0%, and by 1.1% from April to May $650 4.0% . Several sectors within non-residential construction that continue to see spending increases include $600 0.0% manufacturing, amusement and recreation, office, and sewage and waste disposal $550 -4.0%

$500 -8.0%

$450 -12.0% May-06 May-07 May-08 May-09 May-10 May-11 May-12 May-13 May-14 May-15

Non-Residential Construction Non-Residential Construction M-o-M Change

Seasonally Adjusted Annual Rate Source: U.S. Department of Commerce: Census Bureau

U.S. HOUSING STARTS . U.S. housing starts in February were at a seasonally adjusted annual rate of (units in 000’s) 1,174,000, 9.8% above the May estimate Jun. 2015 Total: 1,174 2014 Housing Starts: of 1,069,000, and 26.6% above the 2,500 M-o-M Δ: 9.8% ~30% below 50-year estimate for June 2014 Y-o-Y Δ: 26.6% average

. Increase in housing starts are attributable 2,000 to pent up demand from a slow start to the year due to weather as well as a strong recovery 1,500 . Housing starts continue to rebound from unprecedented lows reached in 2009, yet remain ~30% below the 50-year average of 1.5 million starts per year and 1,000 are still below the average cyclical low of 1.0 million 500 . New residential construction is projected to grow at a 22% CAGR from 2014 to 2018

0 1960 1968 1976 1984 1992 2000 2008 2016P Single Family Multi Family 50-Year Average Average Recesion Low

Sources: Census Bureau; projections are derived from census of 11 reputable sources

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PAGE | 6 BUILDING PRODUCTS AND MATERIALS INDUSTRY UPDATE │ JULY 2015 ECONOMIC UPDATE

REPAIR AND REMODELING SPEND

. Repair and remodeling spend reached ($ in billions) over $155 billion in 2014, and continues $200 to experience significant growth as 2014 – 2018 CAGR: 4.4% homeowners invest in their homes

. Repair and remodeling spend is less cyclical than new construction and provides stability to the overall market $150

. R&R spend dropped just 10% from 2007 to 2009 as consumers chose to invest in repairs and remodels in lieu of making substantial investment in new homes $100 . Growth for 2014 – 2018 is projected at a CAGR of 4.4%

$50

$0 2002 2004 2006 2008 2010 2012 2014 2016P 2018P

Source: McGraw Hill

U.S. REMODELING MARKET INDEX

. RMI of 57 in Q1 2015 was the eighth consecutive quarter for an RMI over 50 65

. In the fourth quarter of 2014, the Remodeling Market Index (RMI) posted a record-high result of 60 60 Index values greater than 50 indicate activity higher than the previous quarter . An RMI over 50 indicate that remodelers are reporting higher activity than the previous quarter. The overall RMI 55 averages the indicators of current and future remodeling activity 50 . RMI was over 50 in all four regions (Northeast, Midwest, South, West), led by the West region with a RMI of 62 45

40 Q1 Q3 Q1 Q3 Q1 Q3 Q1 2012 2012 2013 2013 2014 2014 2015

Source: National Association of Home Builders

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PAGE | 7 BUILDING PRODUCTS AND MATERIALS INDUSTRY UPDATE │ JULY 2015 M&A MARKET TRENDS

MARKET OBSERVATIONS

. Global M&A activity in Q2 2015 almost matched the record set in Q2 2007, and stands out for the number or mega-deals that were clinched or attempted

− Deal volume in the Americas increased for Q1 2015 increased approximately 13% as compared to same period in 2014

− Total volume of deals over $1 billion was the highest it has been for the first quarter since Q1 2007 with 127 deals totaling $549.7 billion.

− Net income, EBITDA, and revenue multiples were up 14.5%, 23.3%, and 38.3% respectively in Q1 2015 compared to Q1 2014

. Credit conditions remain issuer-friendly, and leveraged loan multiples remain robust, with average debt multiples approximately 4.8x EBITDA for issuers through Q1 2015

. Large corporations continue to drive M&A activity with bloated cash balances, soaring stock prices, and relatively inexpensive credit

. North American building products deal activity is down approximately 11% YTD 2015 from prior year

BUILDING PRODUCTS QUARTERLY M&A ACTIVITY

Total Transactions: 176 Total Transactions: 202 Total Transactions: 191 Total Transactions: 156 Total Transactions: 187 YOY Change: 35.4% YOY Change: 14.8% YOY Change: (5.4%) YOY Change: (18.3%) YOY Change: 19.9%

10 Number of Announced M&A Deals

0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015

Note: Includes all building products, construction materials, or forest products, for M&A transactions announced in the U.S. or Canada Source: Capital IQ, S&P Leveraged Commentary & Data, Thomson Reuters, Bloomberg, Markit Economics, Investment News.

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PAGE | 8 BUILDING PRODUCTS AND MATERIALS INDUSTRY UPDATE │ JULY 2015 SELECT SECTOR OVERVIEWS & TRENDS

AGGREGATES Description . Broad category of materials such as crushed rock, manufactured sand, U.S. Aggregates Consumption natural sand, and gravel (values in millions of metric tons) 3,000 . Most-used material in the world, after water Industry Commentary: 2,500

th . On July 9 , congress passed a bill to ease permitting for domestic mines, 2,000 1,060 which included aggregates 847 904 1,500 838 805 810 839 . Markets are local in nature due to high shipping costs . Major players include Lafarge, Cemex, CRH, Heidelberg Cement, Martin 1,000 Marietta, Vulcan Materials and a large number of independent operators 1,450 500 1,160 1,160 1,160 1,170 1,190 1,170 . Demand derived from total construction spending, which is based on global, national, regional and local economic conditions. 25 billion tons of 0 aggregates are used per year globally, roughly four tons per person 2008 2009 2010 2011 2012 2013 2014 Source: U.S. Geological Survey Crushed Stone Sand/Gravel

ASPHALT

Description U.S. Refinery Net Production of Asphalt and Road Oil . Paving and roofing materials include asphalt and tar-paving mixtures and (thousands of barrels) blocks, shingles, roofing cements, and coatings 20,000 Industry Commentary: . Asphalt is used over 85% of the time in U.S. highway and road construction 16,000

th . On July 15 , the U.S. House of Representatives passed an $8 billion short- 12,000 term patch for the surface transportation programs through 12/31/15 . MAP 21 regulations extend and fund federal highway programs, including 8,000 over $120 billion for infrastructure programs 4,000 . Simultaneously, resurgent U.S. housing activity supports asphalt shingle and roofing cement demand 0

Source: U.S. Energy Information Administration

CEMENT AND CONCRETE

Description U.S. Cement Consumption Outlook . Portland, natural, masonry, pozzolanic and other hydraulic cements (millions of metric tons) . Typically, manufacturers also thermally treat and mine or quarry lime 120 Industry Commentary: 100 . Two of the industry’s largest players, Lafarge and Holcim, cemented their 80 merger on July 10th 60 . U.S. cement consumption has historically exceeded domestic production capacity 40 . Concrete has been gaining share over asphalt since 2008 20 . U.S. cement capacity and import terminals are largely owned or 0 controlled by international producers 2007 2009 2011 2013 2015P

. Significant barriers to entry exist for new cement capacity and Government Residential Non-residential transportation costs lead to regional markets

Source: PCA, Eagle Materials, and IBIS

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PAGE | 9 BUILDING PRODUCTS AND MATERIALS INDUSTRY UPDATE │ JULY 2015 SELECT SECTOR OVERVIEWS & TRENDS

LUMBER AND WOOD PRODUCTS

Framing Lumber Composite Price Description Index . Lumber, boards, beams, bolts oriented strand board, poles, shingles, siding, ($ per thousand board feet) and wood chips $500 Industry Commentary: $450 . 70% of U.S. lumber demand is driven by housing, including new construction $400 and remodeling $350 . After a historic price decrease in Q1, lumber prices have leveled off in Q2 $300 $250 . Dealers’ three-month sales expectations remain optimistic as pent up demand from a slow start to 2015 should lead to a strong third quarter $200 $150 $100

Source: Random Lengths

ROOFING

Description Roofing Demand by Primary Segment . Roofing market includes bituminous, wood, and tile roofing used in residential applications and metal elastomeric, and plastic roofing used in nonresidential applications New Industry Commentary: Nonresidential 7.0% . US demand for roofing is projected to rise 3.9% annually to 252 million squares New Residential Residential in 2019, valued at approximately $21.4 billion dollars 9.1% Reroofing 49.4% . Demand for roofing is closely linked to building construction expenditures, but has been more sheltered than other building products markets from the housing slump due to the nondiscretionary need for roof repair and replacement Nonresidential . Houses need to be re-roofed every fifteen years on average and the aging Reroofing U.S. housing stock will drive continued demand for replacement 34.5% . Additionally, renewed strength in new housing construction and a generally stronger economic climate will support growth Source: Freedonia

WINDOWS AND DOORS

Description Leading Indicator of Remolding . Windows and doors market includes metal, wood, and plastic windows and Activity – LIRA ($ in billions) doors for residential and non-residential markets $160 Industry Commentary: $150 . Window and door demand is primarily driven by new commercial and residential construction as well as repair and remodel spending $140 $130 . Annual home improvement spending growth is expected to accelerate to 4.0% in the first quarter of 2016 due largely to recent pick up in home sales $120 activity as recent homebuyers typically spend about a third more on home $110 improvements than non-movers $100 . As first-time buyers begin to return to the market home improvement and $90 housing starts should make a strong push back towards long-term levels $80 Q1 Q1 Q1 Q1 Q1 Q1 Source: The Joint Center for Housing Studies of Harvard University '11 '12 '13 '14 '15 '16P

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WALLBOARD AND PLASTER

Description U.S. Wallboard Demand (billions of square feet) . Primarily made from gypsum, products include wallboard, plaster, plasterboard, molding, ornamental moldings, statuary, and architectural plasterwork 40 Industry Commentary: 35 . Price increases and housing market improvements are expected to show 30 continue through 2015 leading to strong wallboard demand growth 25 . Gypsum product demand is primarily driven by new commercial and 20 residential construction as well as repair and remodel spending 15 . Over the past two years, rising wallboard prices and cost-saving measures 10 have improved industry profit margins 5 . New home inventories are at historically low levels and as demand for new 0 homes grows, builders will respond by increasing their stock 1990 1996 2002 2008 2014 Source: National Gypsum Forecast and Gypsum Association

HVAC

Description Number of World-Wide A/C Units (millions of units) . Residential, commercial, and industrial heating, ventilation, air-conditioning, and refrigeration equipment 180 Industry Commentary: 160 140 . U.S. shipments of central air conditioners and air-source heat pumps in May 120 2015 was down 10% from May 2014 100 . HVAC demand is primarily driven by residential and non-residential 80 construction, HVAC replacement, and weather patterns 60 . Aging domestic buildings (75% of buildings were built before the 1980s) are 40 fueling the demand for replacement equipment 20 . New minimum energy efficiency standards for air conditioning and 0 corresponding tax credits are driving replacement demand 2012 2013 2014E 2015P 2016P 2017P

Source: BSRIA Market Intelligence

PLUMBING FIXTURES AND FITTINGS

Residential Remodeling Index (RRI) Description 125 . Plumbing fixtures, bathtub and shower fixtures, and indoor pipes constitute this segment 100 Industry Commentary: . Through 2018, worldwide demand for plumbing fixtures and fittings is 75 projected to advance over 6% annually to nearly $86 billion . Primary demand determinants are repair and remodel spending, new home 50 construction, and nonresidential improvement and repair . Domestic manufacturers are facing strong headwinds from cheap imports which have increased from 69.9% of the market in 2008 to an estimated 25 78.4% in 2013 0 2006 2008 2010 2012 2014 Source: Remodeling Magazine – RRI Points to Speedup in Remodeling Annual Q1 Q2 Q3 Q4 Activity March 2015

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PAGE | 11 BUILDING PRODUCTS & MATERIALS INDUSTRY UPDATE │ JULY 2015 PUBLIC MARKETS

MEDIAN REVENUE GROWTH (2011 – 2014) MEDIAN REVENUE GROWTH (2014 – 2015P)

Building Materials 7.3% Building Materials 2.5%

Building Products 8.7% Building Products 8.2%

Building Products Distributors 9.9% Building Products Distributors 4.9%

MEDIAN EBITDA MARGIN (2013 – 2015P) MEDIAN EBITDA GROWTH (2014E-2015P)

Building Materials 15.6% Building Materials 9.0%

Building Products 12.7% Building Products 19.1%

Building Products Distributors 5.1% Building Products Distributors 8.8%

MEDIAN CAPEX / REVENUE (2015E) MEDIAN TEV / 2015 EBITDA

Building Materials 6.1% Building Materials 9.5x

Building Products 2.5% Building Products 11.1x

Building Products Distributors 1.4% Building Products Distributors 11.5x

HISTORICAL STOCK PRICES (JULY 19TH, 2010 – JULY 19TH, 2015)

200%

150%

100%

50%

(50%) Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15

Building Materials Index Building Products Index Building Products Distributors Index S&P 500 Index

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PAGE | 12 BUILDING PRODUCTS & MATERIALS INDUSTRY UPDATE │ JULY 2015 PUBLIC COMPARABLES

BUILDING PRODUCTS

As of June 16, 2015 ($ in Millions, except per share amounts)

Stock Performance Current % of 2014 TEV / EBITDA Price LTM High Mkt Cap TEV Revenue EBITDA Margin 2015 2016

ASSA ABLOY AB $19.45 90.3% $21,602 $24,148 $7,265 $1,312 18.1% 16.5x 15.2x Mohawk Industries Inc. 195.21 99.0% 14,268 16,577 7,803 1,161 14.9% 12.1x 10.6x Masco Corporation 23.27 82.0% 8,089 10,428 8,521 1,003 11.8% 10.1x 9.2x Fortune Brands Home & Security, Inc. 44.83 93.1% 7,147 7,731 4,014 498 12.4% 12.4x 10.3x Owens Corning 42.76 93.6% 5,046 7,299 5,276 717 13.6% 9.4x 8.3x Lennox International, Inc. 107.42 90.7% 4,833 5,883 3,367 387 11.5% 12.9x 11.2x Kingspan Group plc 24.77 99.3% 4,372 4,546 2,289 229 10.0% 15.2x 13.0x USG Corporation 26.69 85.1% 3,880 5,873 3,724 454 12.2% 10.1x 8.5x Armstrong World Industries, Inc. 54.27 90.6% 3,000 3,916 2,515 313 12.5% 10.5x 9.3x Masonite International Corporation 68.87 95.7% 2,079 2,490 1,838 117 6.3% 13.5x 10.1x Interface Inc. 24.79 96.9% 1,638 1,838 1,004 113 11.3% 12.2x 10.6x Trex Co. Inc. 47.44 82.2% 1,522 1,603 392 84 21.4% 15.0x 12.3x Nortek Inc. 82.73 92.0% 1,346 2,752 2,546 242 9.5% 9.1x 8.2x NCI Building Systems Inc. 13.97 64.4% 1,031 1,472 1,383 69 5.0% 11.0x 8.6x Continental Building Products, Inc. 21.92 90.5% 947 1,268 425 115 27.0% 9.2x 8.0x American Woodmark Corp. 57.16 98.4% 929 767 807 57 7.0% 9.5x 8.4x Tyman plc 5.16 96.8% 869 1,008 547 84 15.4% 10.2x 9.3x Ply Gem Holdings, Inc 12.79 86.3% 869 1,901 1,567 119 7.6% 11.2x 8.3x Quanex Building Products Corporation 21.10 96.2% 715 655 597 45 7.5% 9.8x 7.6x PGT, Inc. 14.83 96.6% 708 853 306 44 14.2% 11.9x 10.0x

Overall Median 92.5% 12.0% 11.1x 9.3x

Overall Mean 91.0% 12.5% 11.6x 9.9x

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DISTRIBUTORS

As of June 16, 2015 ($ in Millions, except per share amounts)

Stock Performance Current % of 2014 TEV / EBITDA Price LTM High Mkt Cap TEV Revenue EBITDA Margin 2015 2016

Wolseley plc $68.39 99.8% $17,544 $19,508 $20,129 $1,382 6.9% 12.1x 10.8x HD Supply Holdings, Inc. 36.69 99.7% 7,275 12,481 9,009 831 9.2% 13.7x 11.9x Beacon Roofing Supply, Inc. 30.85 90.5% 1,531 1,734 2,371 126 5.3% 10.9x 9.2x Builders FirstSource, Inc. 12.43 87.3% 1,234 1,606 1,604 61 3.8% 17.9x 9.4x Stock Building Supply Holdings, Inc. 18.67 74.1% 489 568 1,296 32 2.5% 12.9x 8.6x Hardwoods Distribution Inc. 13.52 97.2% 225 263 389 22 5.7% 10.5x 9.3x CanWel Building Materials Group Ltd. 4.53 89.5% 192 347 656 25 3.8% 12.6x 9.8x Bluelinx Holdings Inc. 0.95 68.4% 85 548 1,979 23 1.2% NA NA Huttig Building Products Inc. 3.07 69.8% 76 154 636 12 1.9% NA NA Goodfellow Inc. 7.20 84.7% 61 112 409 13 3.1% NA NA Taiga Building Products Ltd. 0.62 84.2% 20 243 1,065 34 3.2% NA NA

Overall Median 87.3% 3.8% 11.5x 9.4x

Overall Mean 85.9% 4.2% 12.9x 9.9x

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BUILDING MATERIALS

As of June 16, 2015 ($ in Millions, except per share amounts)

Stock Performance Current % of 2014 TEV / EBITDA Price LTM High Mkt Cap TEV Revenue EBITDA Margin 2015 2016

Aggregates and Cement LafargeHolcim Ltd. $79.01 96.5% $25,746 $38,643 $19,238 $3,755 19.5% 5.6x 5.2x CRH plc 29.34 98.5% 24,118 27,003 22,892 1,972 8.6% 12.1x 9.8x HeidelbergCement AG 79.35 94.4% 14,910 22,977 15,281 2,472 16.2% 8.1x 7.5x Vulcan Materials Company 90.70 97.5% 12,032 13,918 2,994 575 19.2% 16.9x 13.1x CEMEX, S.A.B. de C.V. 0.90 83.6% 11,487 27,382 14,228 2,482 17.4% 9.2x 8.1x Martin Marietta Materials, Inc. 153.79 98.6% 10,378 11,904 2,679 588 22.0% 13.5x 11.0x Eagle Materials Inc. 76.46 72.3% 3,841 4,346 1,032 284 27.5% 11.0x 8.5x Summit Materials, Inc. 26.19 90.3% 696 1,644 1,204 174 14.4% 6.7x 5.3x

Median 95.5% 18.3% 10.1x 8.3x

Mean 91.5% 18.1% 10.4x 8.6x

Heavy Construction Materials James Hardie Industries plc $14.05 99.3% $6,212 $6,547 $1,622 $348 21.5% 15.1x 12.7x Boral Limited 4.62 93.5% 3,520 4,178 3,643 335 9.2% 9.5x 8.5x Headwaters Incorporated 18.18 89.5% 1,341 1,836 825 134 16.2% 10.7x 9.4x U.S. Concrete, Inc. 43.25 96.9% 631 845 704 70 9.9% 8.4x 6.8x

Median 95.2% 20.4% 10.1x 6.8x

Mean 94.8% 14.2% 10.9x 9.4x

Lumber and Wood Products Weyerhaeuser Co. $30.96 83.6% $16,029 $20,287 $7,693 $1,722 22.4% 13.2x 10.7x West Fraser Timber Co. Ltd. 53.31 87.8% 4,453 4,863 3,330 497 14.9% 9.5x 6.8x Canfor Corp. 21.70 87.9% 2,904 3,298 2,891 442 15.3% 8.4x 5.9x Louisiana-Pacific Corp. 15.93 85.5% 2,269 2,561 1,935 16 0.8% 34.8x 9.8x Norbord, Inc. 19.30 85.5% 1,648 2,113 1,198 89 7.4% 19.1x 6.9x Boise Cascade Company 35.33 80.5% 1,397 1,564 3,574 196 5.5% 8.0x 6.7x Universal Forest Products Inc. 58.62 99.4% 1,172 1,291 2,660 130 4.9% 8.3x 7.6x

Median 85.5% 7.4% 9.5x 6.9x

Mean 87.2% 14.5% 11.1x 7.8x

Overall Median 90.3% 15.3% 9.5x 8.1x

Overall Mean 90.6% 14.4% 12.0x 8.4x

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PAGE | 15 BUILDING PRODUCTS & MATERIALS INDUSTRY UPDATE │ JULY 2015 M&A TRANSACTIONS

Announced Target Vertical Business Description Acquirer Date 7/15/2015 Cali Bamboo, LLC Building Products Cali Bamboo, LLC manufactures green building products for residential High Road Capital Partners; and commercial projects. High Road Capital Partners Fund II, L.P. 7/14/2015 Better Life Technology, LLC Building Products Better Life Technology, LLC manufactures and supplies roll-out garage Century Park Capital and concrete basement floor covers worldwide. Partners, LLC

7/10/2015 Jarvis Supply Company, Distribution Jarvis Supply Company, Inc. distributes industrial tooling to machine BlackHawk Industrial Inc. shops in Colorado and beyond. Distribution, Inc.

7/2/2015 BD Enterprises, Inc. Distribution BD Enterprises, Inc., doing business as Single Source Cabinet Supplies, Richelieu Hardware Ltd. distributes and sells laminates, millwork, and cabinetry supplies.

6/30/2015 Advanced Flooring and Building Products Advanced Flooring and Design LLC manufactures floor covering and Interior Specialists, Inc. Design LLC interior finish products to builders and homebuyers.

6/24/2015 Golden State Window & Building Product Golden State Window & Door Design supplies doors, windows, molding, Golden State Lumber, Inc. Door Design Distribution and mantles to residential and commercial customers.

6/23/2015 C.H.I. Overhead Doors, Building Products C.H.I. Overhead Doors, Inc. manufactures residential, commercial, KKR & Co. L.P.; KKR North Inc. rolling steel, and garage doors for homeowners, contractors, and American XI Fund, L.P. business owners. 6/19/2015 Craft Equipment Company Distribution Craft Equipment Company distributes material handling, storage, and Total Fleet Solutions Ltd. waste reduction equipment in Alabama, Florida, Georgia, South Carolina, and Tennessee. 6/17/2015 Anchor Block Company Building Materials Anchor Block Company designs, manufactures, and sells concrete Oldcastle Architectural, and Anchor Wall Systems, landscape and masonry products. Inc. Inc. 6/11/2015 Oldcastle Surfaces, Inc. Building Materials Oldcastle Surfaces, Inc. manufactures and markets countertops and Seven Stone Surface solid surfaces. Fabrication, Inc.

6/10/2015 Kentec, Inc. Distribution Kentec, Inc. distributes commercial quality tools, pneumatic nailing and Southern Fastening Systems, stapling systems, foam insulation, and adhesives. Inc.

6/8/2015 Rock Ridge Stone Inc. Building Materials Rock Ridge Stone Inc. quarries, manufactures, and distributes natural Salt Creek Capital II, LLC stone products for outdoor applications in the residential and commercial construction markets. 6/4/2015 A.H. Harris & Sons, Inc. Distribution A.H. Harris & Sons, Inc. distributes and sells construction supplies to Frontenac Company heavy and highway construction, commercial, industrial, and residential markets. 6/3/2015 Stock Building Supply Distribution Stock Building Supply Holdings, Inc., together with its subsidiaries, Building Materials Holding Holdings, Inc. distributes lumber and building materials in the United States. Corporation

6/3/2015 Insulation Fabricators, Inc. Building Products Insulation Fabricators, Inc. fabricates and distributes thermal and Distribution International, acoustical insulation products for industrial and commercial markets. Inc.

6/2/2015 Mason Corporation Building Products Mason Corporation manufactures aluminum building products for the Superior Metal Products residential and light commercial markets. Its products include glass Co., Inc. enclosures, retractable doors, awnings, and patio covers. 6/1/2015 ProCoat Systems, Inc. Distribution ProCoat Systems, Inc. supplies building materials to commercial and Beacon Roofing Supply, residential construction projects in Colorado and surrounding areas. Inc.

6/1/2015 DuBROOK Concrete, Inc. Building Materials DuBROOK Concrete, Inc. manufactures and delivers ready-mixed U.S. Concrete, Inc. concrete in the northern Virginia market through its three ready-mixed concrete batch plants and fleet of 42 mixer trucks. 5/31/2015 Thermo-Cell Industries Building Products Thermo-Cell Industries Limited manufactures thermal and acoustical US GreenFiber, LLC Limited cellulose insulation, specialty fibers, and hydroseeding mulches.

5/27/2015 Advanced Building Building Products Advanced Building Products, Inc. manufactures and installs aluminum SRS Distribution, Inc. Products, Inc. replacement and storm windows. It also engages in distributing residential exterior building materials such as siding, and roofing

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PAGE | 16 BUILDING PRODUCTS & MATERIALS INDUSTRY UPDATE │ JULY 2015 M&A TRANSACTIONS

Announced Target Vertical Business Description Acquirer Date 5/22/2015 Colonial Concrete Building Materials Colonial Concrete Company, Inc. produces ready-mix concrete and U.S. Concrete, Inc. Company, Inc. offers products for footing applications, light weight mixes for elevated slabs, flyash mixes, curbs and sidewalks, and color concrete. 5/7/2015 Simon Contractors., Building Materials Blueknight Energy Parterns has acquired a Cheyenne, Wyoming asphalt Blueknight Energy Partners, Cheyenne, Wyoming terminalling facility previously owned by Simon Contractors, a multi- L.P. Asphalt Terminal state, heavy highway contractor. 5/4/2015 TruStile Doors, LLC Building Products TruStile Doors, LLC designs and manufactures doors. In addition the Marvin Windows and company provides design, planning, and support services. TruStile is Doors, Inc. based in Denver, CO. 4/22/2015 Holcim Ltd., Cement Building Materials Holcim Ltd. divested its slag cement grinding facility in Camden, NJ, and ESSROC Cement Corp. Facilities in USA its cement terminal in Everett, MA. The acquisition will be finalized with the pending Holcim and LaFarge merger in 2015. 4/20/2015 VNS Corporation Building Products Headquartered in Vidalia, Georgia, VNS operates six full line building Building Materials Holding material stores, a wholesale company, a one step roofing yard, two Corporation manufacturing companies plus a construction services company. 4/17/2015 Direct Cabinet Sales, Inc. Distribution Direct Cabinet Sales, Inc. designs, distributes, sells, and installs US LBM Holdings, LLC kitchen/bath/storage cabinetry and related products to residential, commercial, and new construction markets. 4/17/2015 Rosen Materials, LLC Distribution Rosen Materials, LLC distributes residential and commercial building US LBM Holdings, LLC products in the United States and the Caribbean.

4/17/2015 Grabill Incorporated Building Products Grabill Incorporated manufactures designer windows and doors. Pella Corporation

4/17/2015 Lafarge North America Building Materials Lafarge North America Inc., Cement Assets comprise a cement plant in Continental Cement Inc., Cement Assets Davenport, IA, plus seven Mississippi River cement distribution terminals Company, LLC that stretch from Minneapolis to New Orleans. 4/15/2015 A1A Sod Sand & Soil, Inc. Distribution A1A Sod Sand & Soil, Inc. operates a retail and wholesale garden A1 Group, Inc. center that offers a range of commercial and residential designs, delivery, and installations in South Florida. 4/14/2015 Security Supply Distribution Security Supply Corporation markets plumbing, heating, and cooling WinWholesale Inc. Corporation equipments.

4/13/2015 ProBuild Holdings, Inc. Distribution ProBuild Holdings, Inc. distributes lumber and building materials to Builders FirstSource, Inc. builders, contractors, and tradesmen in the United States.

4/7/2015 Northland Construction Distribution Northland Construction Supplies Ltd. supplies goods to concrete National Concrete Supplies Ltd. construction, ceramic, and masonry industries. Accessories

4/2/2015 Richardson Gypsum, LLC Distribution Richardson Gypsum, LLC provides construction supplies and equipment US LBM Holdings, LLC for construction projects.

4/2/2015 Ferrara Brothers Building Building Materials Ferrara Brothers Building Materials Corp. manufactures concrete. U.S. Concrete, Inc. Materials Corp.

3/31/2015 Design Specialties, Inc. Building Products Design Specialties, Inc. manufactures glass fireplace doors. Blackthorne Partners LTD.

3/30/2015 Norcraft Companies, Inc. Building Products Norcraft Companies, Inc. manufactures kitchen and bathroom Fortune Brands Home & cabinetry in the United States and Canada. Security, Inc.

3/30/2015 AFC Industries, Inc. Distribution AFC Industries, Inc. engages in the purchase, distribution, assembly, and Incline Equity Partners; packaging of fasteners and related hardware products. Incline Equity Partners III, L.P. 3/27/2015 PrimeSource Building Distribution PrimeSource Building Products, Inc. distributes fasteners and building Platinum Equity, LLC Products, Inc. materials.

3/26/2015 Martin Fireproofing Building Products Martin Fireproofing Corporation manufactures, sells, and installs Innovative Metals Corporation specialty roof deck solutions. Company, Inc.

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PAGE | 17 BUILDING PRODUCTS & MATERIALS INDUSTRY UPDATE │ JULY 2015 M&A TRANSACTIONS

Announced Target Vertical Business Description Acquirer Date 3/26/2015 Martin Fireproofing Building Products Martin Fireproofing Corporation manufactures, sells, and installs Innovative Metals Corporation specialty roof deck solutions. Company, Inc.

3/25/2015 Pinnacle Stone & Tile LLC Building Products Pinnacle Stone & Tile LLC manufactures and installs countertops, shower L.A.R.K. Industries, Inc. and bath surrounds, fireplaces, vanities, floor inlays, and custom projects in Northern California. 3/25/2015 J & B Materials, Inc. Building Materials J & B Materials, Inc. is a supplier of drywall, metal studs, plaster, pool, Gypsum Management and and general building materials. Supply, Inc.

3/19/2015 Pipeline Supply, Inc. Distribution Pipeline Supply, Inc. operates as a wholesale distributor of plumbing, Dakota Supply Group, Inc. HVAC, hydronics, radiant floor heating, sewer, water, and well supplies.

3/17/2015 Thermoseal Industries, LLC Building Materials Thermoseal Industries, LLC develops, produces, and sells insulating glass Senneca Holdings units to the commercial refrigeration, oven, test laboratory, and architectural markets. 3/12/2015 Fry Reglet Corporation, Building Products Axiom & Serpentina Ceiling Systems of Fry Reglet Corporation, a ceiling Worthington Armstrong Axiom & Serpentina Ceiling systems manufacturer, was acquired by Worthington Armstrong Venture Systems Venture. 3/9/2015 Easi-Serv Products Inc. Building Products Easi-Serv Products Inc. designs and manufactures drive-thru windows, Franke Foodservice food conveyors, and glass patios. Systems, Inc.

3/7/2015 Mechoshade Systems, Inc. Building Products Mechoshade Systems, Inc. provides manual, motorized, and automated Springs Window Fashions solar-shading and room-darkening solutions. LLC

3/2/2015 Lampert Yards, Inc. Distribution Lamperts is a leading building material distributor providing windows, US LBM Holdings, LLC doors, roofing, siding, insulation, millwork, cabinets, and framing materials to professional builders and consumers in their local markets. 3/2/2015 BMI Products of Northern Building Materials BMI Products of Northern California Inc. manufactures silo systems for Sika AG California Inc. construction needs.

2/26/2015 Zero International, Inc. Building Products Zero International, Inc. designs and manufactures a range of Schlage Lock Company specialized sealing systems for doors and windows. LLC

2/26/2015 Atis Group Inc. Building Products Atis Group Inc. develops, manufactures, distributes, and installs Desjardins Business Capital windows, doors, and products for residential and commercial régional et coopératif construction and renovation markets in Canada. 2/25/2015 J. A. Jack & Sons, Inc. Building Materials J. A. Jack & Sons, Inc. mines and processes limestone. Harrison Gypsum, LLC

2/24/2015 Right Away Redy Mix, Inc. Building Materials Right Away Redy Mix, Inc. provides ready-mix, aggregate, and U.S. Concrete, Inc. concrete pumping products and services.

2/18/2015 Maryland Materials, Inc. Building Materials Maryland Materials, Inc. engages in mining and producing granite and Bluegrass Materials traprock products. Company, LLC

1/29/2015 Preferred Sands of Building Materials Preferred Proppants, LLC, Assets of Hanson Lake Facility comprises silica Hilco Industrial, LLC; Canada, ULC, Assets of sand mining assets. Gordon Brothers Group, Hanson Lake Facility LLC, Investment Arm 1/29/2015 B&L Wholesale Supply Building Materials B&L Wholesale Supply is a Northeastern distributor of roofing and related SRS Distribution residential and commercial building products, supplies, and services

1/7/2015 Wameling Drywall Corp. Distribution Wameling Drywall Corp., doing business as Gilbert Supply Company, American Builders & supplies building products. Contractors Supply Co., Inc. 12/29/2014 AGC Flat Glass North Building Materials AGC Flat Glass North America, Inc. fabricates Commercial Glass in the Trulite Glass Company, LLC America, Inc. United States.

12/23/2014 PFB Corp. Building Products PFB Corporation is engaged in manufacturing and marketing insulating Aeonian Capital building products primarily for the residential and commercial Corporation construction projects in North America.

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PAGE | 18 BUILDING PRODUCTS & MATERIALS INDUSTRY UPDATE │ JULY 2015 REPRESENTATIVE BUILDING PRODUCTS & MATERIALS TRANSACTIONS

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PAGE | 19 BUILDING PRODUCTS & MATERIALS INDUSTRY UPDATE │ JULY 2015

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SOURCES

Bloomberg Thomson Financial – SDC Database

Building Design & Construction Thomson Reuters

Building-Products.com U.S. Census Bureau

Bureau of Economic Analysis

Eurostat

Freedonia

Global Industry Analysts

IBIS

New York Times

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S&P Leveraged Commentary & Data

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