FINAL Capstone Headwaters Building Products M&A …

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CONTRIBUTORSDarin Good Managing Director [email protected]

Brian Krehbiel Senior Vice President [email protected]

Crista Gilmore Vice President [email protected]

Dominic CerviVice [email protected]

January 2019www.capstoneheadwaters.com

Capstone Headwaters

Strong macroeconomic fundamentals, including the nine-year expansion of theUS economy, low unemployment, and high consumer confidence levels, drovehealthy industry activity in the Building Products space in 2018. In Q2, theAssociated Builders and Contractors’ Construction Backlog Indicator hit ahistoric high of 9.9 months and has since remained above 9.0 months, indicatingstrong levels of construction activity in the coming months.1 While demand forconstruction activity exists, increasing material prices and the shortage ofconstruction workers (currently exacerbated by the constricted US job market)are potential restraints to overall industry expansion.

Year-to-date (YTD), 231 mergers and acquisitions (M&A) have been announcedor completed compared to 214 in all of 2017. The Window & Door subsectorhas been one of the most active, as showcased by Clayton, Dubilier & Rice’s(CD&R) blockbuster acquisitions of Ply Gem for $2.4 billion and AtriumWindows & Doors (undisclosed) in April (see page seven). Since the growth ofthe industry is constrained by labor shortages, building products companiesthat can offer innovative products which eliminate or reduce the amount oflabor needed, will be attractive targets in 2019.

TABLE OF CONTENTS

M&A Overview Construction Pricing Construction Markets Company Spotlight Notable Transactions Select Transactions Public Company Data Firm Track Record

BUILDING PRODUCTSQ1 2019

MERGER & ACQUISTION OVERVIEW

Year-to-date (YTD) ended December 20Source: Capital IQ and Capstone Headwaters Research

Num

ber o

fTra

nsac

tions

M&A Activity: Building Products

55 59 62 48 51 8756 56 57 61 60

5056 70 69 54 53

4952

62 58 72 50 45

0

100

200

300

2013 2014 2015 2016 2017 2018Q1 Q2 Q3 Q4

219247 246 235 214 231

Producer Price Index – Commodities Construction(Index Base Year 1982 =100, Not Seasonally Adjusted)

CONSTRUCTION INPUT PRICING – Upstream Supply

Source: US Bureau of Labor Statistics

November-17 October-18 November-181 Month %

Change12 Month % Change

Asphalt Felts and Coatings 223.5 244.5 245.1 0.2% 9.7%Concrete Products 220.9 229.2 222.7 -2.8% 0.8%Fabricated Structural Metal Products 220.0 239.3 238.9 -0.2% 8.6%Glass 133.3 136.3 136.2 -0.1% 2.2%Hardware 253.4 259.7 260.1 0.4% 2.6%Hardwood Lumber 223.9 228.6 224.9 -1.6% 0.4%Iron and Steel 208.8 240.8 245.6 2.0% 17.6%Nonferrous Wire and Cable 249.2 256.3 256.4 0.0% 2.9%Plumbing Fixtures and Fittings 265.4 271.0 276.4 2.0% 4.1%Plywood 220.9 229.2 222.7 -2.8% 0.8%Softwood Lumber 233.2 215.1 208.6 -3.0% -10.5%

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Building Products | Q1 2019


Iron & Steel Price History

The price of Iron and Steel has climbed a significant 17.6%year-over-year (YoY), and 2.0% from October 2018 toNovember 2018. The recently signed US Mexico CanadaAgreement (USMCA), which will replace the 1994 NorthAmerican Free Trade Agreement (NAFTA), is expected tocontinue to bolster this upward price trajectory. As notedin the AK Steel’s (NYSE:AKS) December Investor RelationsPresentation: “New Rules of Origin for autos and certainsteel containing goods, including transformers –incentivizes greater use of steel made in North America.”2

Iron and Steel

160180200220240260

Index

1982

=100


Softwood Lumber Softwood Lumber Price History

180200220240260280Following an all-time Index high of 273.6 in June, the cost

for Softwood Lumber has declined 10.5% YoY and 3.0%from October to November. The summer pricing peakcame after the Trump administration imposed 20.0% tariffson imported Canadian softwood lumber.3 Commenting onthe progression of the updated NAFTA agreement,National Lumber and Building Material Dealers AssociationPresident & CEO Jonathan Paine stated in a press release:“The US should build on this positive momentum byresolving the softwood lumber dispute with Canada andending the steel and aluminum tariffs on imports fromMexico and Canada.”4

Index

1982

=100

CONSTRUCTION MARKET DYNAMICS – Downstream Demand

US Housing Units Started by Region(Monthly, Not Seasonally Adjusted)

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Housing Construction

Following the 2006 peak and subsequent burst of thehousing bubble, housing starts have been steadily onthe rise across the entire US to meet the demand ofpopulation growth. Housing starts have increased 4.2%year-over-year, from 1.17 million in 2017 to 1.22 millionin 2018, according to the US Census Bureau.5 Thelargest number of housing units were started in theSouth (7.5 million) and the West (4.1 million) over thelast twelve months (LTM).

Of the total starts, multi-family production climbed20.2% while single-family starts declined 13.1% YoY.The rise in mutli-family production, which includes bothcondominiums and apartments, has been driven in partby Millennials, who are hampered by student debt, andcan’t afford additional debt obligations. Partly as aresult of this, these individuals are delaying marriageand children longer than prior generations and areopting to live in cities over owning a home.

Overall, however, the pipeline for future housing startsremained strong, with the number of constructionpermits climbing 5.0% to 1.3 million in November.Year-to-date, the number of permits has increased themost in the densely populated South, which houses~38.0% (123.7 million) of the US population. Source: US Census Bureau

0

200

400

600

800

1000

1200

2000 2003 2006 2009 2012 2015 2018

West Midwest South Northeast

Units

in Th

ousa

nds

One of the strengths of themulti-family market in recentyears is the availability of capital,especially debt. Despite someconcerns about the durability ofthe economic expansion, thehealthy capital environmentshould continue through 2019.

- Yardi Matrix, Multifamily National Report, November 20186

“

”

Source: Associated Builders & Contractors

Construction Backlog

The Associated Builders and Contractors(ABC) Construction Backlog Indicator (CBI) isa forward-looking national economicindicator that reflects the amount of workthat will be performed by commercial andindustrial contractors in the coming months.

Driven in part by the devastating wildfires inCalifornia, the largest backlog increase was inthe West, with the average backlog growingby 2.7 months year-over-year.6 Despite the1.4 month decrease in backlog time from Q32017 to Q3 2018, the average backlog in theSouth remains the longest at 10.0 months. Asnoted on the previous page, the South, dueto its affordability, mild climate, and lower taxrates, is a high-growth area for constructionand housing.

The chart shows the national average byquarter and by year. Following the eight yearhistoric backlog high in Q2, the Q4 averagedipped below 2017 while still remainingelevated above the long-term average.

Year-over-Year CBI Map of Regions and Backlog Month

SouthQ3 2017: 11.3 monthsQ3 2018: 10.0 months

Source: Associated Builders & Contractors

MidwestQ3 2017: 7.6 monthsQ3 2018: 7.8 months

NortheastQ3 2017: 10.2 monthsQ3 2018: 9.2 months

+2.7 MONTHS

WestQ3 2017: 6.6 monthsQ3 2018: 9.4 months

+0.2 MONTHS

-1.0 MONTHS

-1.3 MONTHS

CBI - National Backlog AverageQ1 2010 – Q3 2018

4


6.1 7.3 7.4 7.9 8.1 8.4 8.6 9.0 8.8

7.28.1 7.7 8.2 8.5 8.5 8.5 8.6 9.9

7.08.1 8.0 8.2 8.8 8.5 8.7 9.5 9.07.17.8 8.0 8.3 8.7 8.7 8.3 8.7

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

2010 2011 2012 2013 2014 2015 2016 2017 2018

Q1 Q2 Q3 Q4

CONSTRUCTION MARKET DYNAMICS (CONTINUED)

Remodeling Market Index

Remodeling Market Index (RMI)(Quarterly, Seasonally Adjusted)

The Remodeling Market Index (RMI) is based on aquarterly survey in which remodelers are asked torate a variety of aspects within the remodelingmarket as ‘higher’ or ‘lower’ than the prior quarter.

An index number of 50 indicates equal numbers ofremodelers reporting activity ’higher’ and ‘lower’than the prior quarter. Any number over 50indicates that more remodelers view remodelingmarket conditions as higher than the previousquarter.

The RMI posted a reading of 58 in Q3 2018, a slightincrease from Q2, and maintaining an above-50reading for every quarter since Q2 2013.7

Source: NAHB Remodeling Market Index


Architecture Billings Index

Q2 2018

57.0

010203040506070

2002 2004 2006 2008 2010 2012 2014 2016 2018Current Market ConditionsFuture Market Conditions

Higher activity than prior quarter

Lower activity than prior quarter

Q3 2018

58.0

AIA’s monthly Architecture Billings Index (ABI) is aleading economic indicator for nonresidentialconstruction activity, with a lead time ofapproximately 9–12 months. The index is derivedfrom AIA’s Work-on-the-Boards survey, which hasgathered data on shifts in billings from architecturalfirm leaders for over 20 years. During November,AIA’s ABI score climbed to 54.7, the highest levelsince January, indicating continued healthyconditions for architecture firms.8

Source: The American Institute of Architects

November

54.7October

50.4

October

52.8November

54.6

Design Contracts

BillingsArchitecture Billings Index

Commercial/Industrial:

53.8Institutional:

50.8Residential:

51.2

Billings by Sector

5

CONSTRUCTION MARKET DYNAMICS (CONTINUED)


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COMPANY SPOTLIGHT

Buyer Type: StrategicOwnership: PrivateHeadquarters: Cary, North CarolinaMarkets: Residential Interior and Building ProductsAcquisition Strategy: Expand footprint & product offerings

Company Description:

Founded in 1943, Ply Gem (the “Company”) designs and manufactures residential interior and building products. Ply Gem isa North American leader in vinyl siding and in vinyl and aluminum windows. The Company produces products that includewindows and patio doors, vinyl and aluminum siding and accessories, designer accents, cellular PVC trim and moldings, vinylfencing and railing, stone veneer, and roofing and gutterware products. Ply Gem’s comprehensive product portfolio is usedin both new construction and home repair and remodeling.

Recent Relevant Activity:

Clayton, Dubilier & Rice acquires Ply Gem(January 2018, ~$2.4 billion)

Clayton, Dubilier & Rice (CD&R), a New York-based private equity firm, acquired all outstanding shares of Ply Gem in apublic-to-private transaction valued at approximately $2.4 billion. Shortly after completing the acquisition of Ply Gem inApril, CD&R closed the add-on acquisition of Atrium Corporation, a provider of high quality windows and doors, to create anexterior building products company.

“This is a transformational milestone for two highly complementary businesses,” said Nate Sleeper, Partner at CD&R, in apress release. “Together, Ply Gem and Atrium have a well-positioned platform across North America, a deep set ofcapabilities to serve customers, and a strong foundation for long-term growth and value creation.”9

Ply Gem acquires Silver Line Building Products(August 2018, $190.0 million)

Ply Gem acquired the Silver Line vinyl window and patio door division of Andersen Corporation for a transaction value of$190.0 million at 10.0x EBITDA.10 Under the terms of the deal, Ply Gem will acquire the product portfolio sold under theSilver Line and American Craftsman brands, four Silver Line manufacturing plants, and the associated distribution andsupport services. The strategic acquisition strengthens Ply Gem’s product offerings across the Repair and Remodeling andNew Construction markets, establishing a stronger national windows platform with enhanced manufacturing scale anddistribution channels.

NCI Buildings Systems, Inc. acquires Ply Gem(November 2018, $3.6 billion)

On the heels of its privatization, Ply Gem was acquired by NCI Building Systems (NYSE:NCS) for a transaction value of $3.6billion.11 Headquartered in Houston, Texas, NCI is a leading manufacturer of exterior building products for commercialconstruction. The combined entity will become a complete provider for exterior building envelope needs. The acquisition isexpected to broaden NCI’s product portfolio in multiple end-markets with complete coverage across direct, distribution, andretail customers. The highly complementary businesses, on a combined basis, are expected to generate approximately $4.5billion in CY2018 revenue and a pro-forma adjusted EBITDA of approximately $660.0 to $680.0 million.


Quikrete Holdings acquires US Block Business of Boral Limited(October 2018, $156.0 million)

Quikrete Holdings, a manufacturer and distributor of packaged concrete, pre-blended, cement mix, andrelated products, has acquired the US Block business of Boral (ASX:BLD) for $156.0 million.12 Located inTexas, the US Block business of Boral manufactures concrete blocks. The acquisition expands Quikrete’sscale in the US, adding a proven, well-developed business to its operations. Australia-based, Boral,divested its US Block business in order to strengthen its balance sheet and to focus on its core buildingproducts and fly ash businesses in North America.

PGT Innovations acquires Western Window Systems(July 2018, $360.0 million)

PGT Innovations, a leading US manufacturer and supplier of impact-resistant windows and doors, hasacquired Western Window Systems for $360.0 million from PWP Equity Growth, the private equity armof Perella Weinberg Partners.13 Western Window Systems is a provider of contemporary window anddoor systems with expected net sales of approximately $126.0 to $136.0 million across 40 states in2018. The strategic acquisition supports PGT Innovations growth initiative to expand its geographicfootprint outside of Florida into high-growth Western and Southwestern markets.

BlueLinx Corporation acquires Cedar Creek Holdings(March 2018, $413.0 million)

BlueLinx (NYSE:BSX) has acquired Cedar Creek, a leading building products wholesale distributor, forapproximately $413.0 million, equating to a 6.9x EBITDA multiple.14 The acquisition creates one of thelargest wholesale distributors in the Building Products industry with a combined revenue of $3.2 billionin 2017. The combined entity will service 40 US states with 70 facilities, offering the largest suite ofproducts in the Building Products industry. The expansion of operational scale is expected to generatean annual run-rate cost savings of at least $50.0 million annually, realized within 18 months.

Acquires

Acquires

Acquires

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NOTABLE TRANSACTIONS

Knauf KG to acquire USG Corporation (March 2018, $6.9 billion)

Knauf has entered into a definitive agreement to acquire USG Corporation (NYSE:USG) for a transactionvalue of $6.9 billion and a EBITDA multiple of 13.1x.15 Founded in 1901, USG manufactures and sellsbuilding materials worldwide. The strategic acquisition combines two highly complementary businessesto create a global Building Materials industry leader, leveraging an extensive suite of products and aglobal footprint to enhance its ability to serve the companies’ end-market customers. Knauf intends tomaintain USG’s existing headquarters in Chicago as well as its facilities in North America.

Acquires

Beacon Roofing Supply, Inc. acquires Allied Building Products Corporation(January 2018, ~$2.6 billion)

Beacon Roofing Supply (NasdaqGS:BECN), the largest publicly traded distributor of roofing andcomplementary building products in North America, has acquired Allied Building Products forapproximately $2.6 billion, equating to 14.0x EBITDA.16 Founded in 1950, Allied Building Productsdistributes roofing and custom sheet metal fabrication products and previous to the acquisition was asubsidiary of CRH plc (NYSE:CRH), a global diversified building products group. The acquisition furtherstrengthens Beacon’s geographic footprint, expanding its presence in New York, New Jersey, and theUpper Midwest and provides Beacon with entry into the adjacent interior business.

Acquires

Enterprise EV / LTMDate Target Acquirer Target Business Description Value (mm) Revenue EBITDA

12/03/18 Arran Isle Patrick Industries Distributes building products for the factory-built housing, commercial, and other related markets. $54.0 0.2x -

11/23/18 Glen-Gery Corporation Brickworks Limited Manufactures bricks, and masonry supplies and tools

for building industry in the US. $110.0 0.9x 8.5x

11/15/18 Armstrong Wood Products

American Industrial Partners

Manufactures and distributes hardwood flooring products and kitchen and bathroom cabinets. $100.0 - 7.2x

10/17/18 US Block Business of Boral Quikrete Holdings Comprises the business of manufacturing concrete

blocks in Texas. $156.0 - -

10/01/18 Valmiera Glass USA

Lamtec Corporation Manufactures fiberglass and fiberglass products. $100.0 - -

09/03/18 Concrete Specialties

Oldcastle Infrastructure Manufactures and markets precast concrete products. $46.6 - -

08/23/18 Fiberon Fortune Brands Home & Security

Manufactures wood-alternative decking, railing, and fencing products for outdoor living applications. $470.0 2.4x -

08/14/18 Tandelle-Pacer Atlas Engineered Products

Designs and manufactures engineered floor, wall, and roof systems. $6.6 0.6x 4.5x

07/24/18 WWS Acquisition PGT Innovations Provides building products including windows, awning, and doors. $360.0 - 19.2x

07/17/18 Ply Gem NCI Building Systems Manufactures exterior building product use for residential construction. $3,606.5 - -

07/02/18 ATCO Rubber Products Mueller Industries Manufactures flexible duct systems for residential and

commercial HVAC applications. $162.8 1.0x -

05/07/18 MORSCO Reece LimitedOffers lighting products, kitchen and bath plumbing supplies, and plumbing fixtures and supplies. $1,440.0 0.8x -

05/03/18 CornellCookson Clopay Building Products Company

Manufactures rolling doors and grilles including rolling service and insulated exterior and interior doors. $180.0 - -

04/30/18 Dehco Patrick Industries Distributes building products to recreational vehicle, manufactured housing, and marine industries. $53.0 0.6x -

03/26/18 USG Corporation Gebr. Knauf KG. Manufactures and sells building materials worldwide. $6,937.3 2.2x 13.1x

03/22/18 Taiga Building Products Avarga Limited Operates as a wholesale distributor of building

products in Canada and the US. $145.8 0.1x 3.6x

03/12/18 Cedar Creek Holdings BlueLinx Corporation Offers industrial products, including hardwood lumber

and plywood and, particleboard. $413.0 0.3x 6.9x

03/07/18 Ashland Products Amesbury Group Manufactures residential window and door hardware for the fenestration industry. $101.0 1.5x 9.0x

03/02/18 United Subcontractors TopBuild Provides insulation, specialty, and shell construction

services for residential and commercial projects. $475.0 - -

02/26/18 MixOnSite USA CEMATRIX Corporation Supplies low density foam concrete. $5.0 - -

02/14/18 Lehigh White Cement Company

CEMEX; Aalborg Cement Company

Produces, imports, and markets white Portland and masonry cements for the Construction industry $275.7 1.9x 10.6x

01/15/18 Valmiera Glass USA

P-D Management Industries Manufactures fiberglass and fiberglass products. $32.6 - -

01/08/18 L.D. Kichler Co. Masco Provides indoor and outdoor lightings, ceiling fans, landscape lightings, lamps, and mirrors. $550.0 1.2x -

Source: Capital IQ, Pitchbook, and Capstone Headwaters Research

SELECT TRANSACTIONS

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PUBLIC COMPANY TRADING & OPERATING DATA

One Year Returns As of December 16, 2018

S&P 500Dow Jones Industrial Average

Plumbing / HVAC

Decking / Siding / Drywall

Building Systems

Window / Door

Lumber / Wood Products

Building Product

Distribution

-0.9% -2.2% -20.9% 11.8% -35.9% -40.7% -26.7% -23.2%

Price % 52 Wk Market Enterprise LTM EV / LTMCompany 12/14/18 High Cap Value Revenue EBITDA Margin Revenue EBITDAPlumbing / HVACAAON $35.30 78.6% $1,838.9 $1,828.3 $425.8 $74.5 17.5% NM 24.6xA. O. Smith Corp. $41.41 60.5% $7,037.7 $6,613.2 $3,144.0 $621.1 19.8% 2.1x 10.6xLennox International $213.88 92.7% $8,615.8 $9,695.6 $3,932.1 $594.9 15.1% 2.5x 16.3xMasco Corp. $29.54 63.6% $9,024.4 $11,599.4 $8,173.0 $1,293.0 15.8% 1.4x 9.0xAverage 73.9% $6,6292.2 $7,434.1 $3,918.7 $645.9 17.0% 2.0x 15.1x

Decking / Siding / Drywall Continental Building Products $25.86 65.3% $952.7 $1,111.4 $518.7 $147.2 28.4% 2.1x 7.6xTrex Company $58.91 64.9% $3,461.2 $3,353.9 $666.5 $188.1 28.2% NM 17.8xUSG Corp. $43.03 99.0% $6,013.7 $6,702.7 $3,348.0 $518.0 15.5% 2.0x 12.9xAverage 76.4% $3,475.9 $3,722.6 $1,511.1 $284.4 24.0% 2.1x 12.8x

Building SystemsApogee Enterprises $31.95 62.2% $900.4 $1,107.2 $1,408.6 $163.4 11.6% 0.8x 6.7xArmstrong World Industries $60.75 82.7% $3,011.1 $3,511.5 $950.7 $342.8 36.1% 3.7x 10.2xNCI Building Systems $9.82 42.1% $1,225.9 $1,591.6 $2,000.6 $176.9 9.2% 0.8x 8.7xOwens Corning $43.22 44.8% $4,724.8 $8,303.8 $6,939.0 $1,116.0 16.1% 1.2x 7.4xAverage 57.9% $2,465.6 $3,628.5 $2,803.5 $450.2 18.3% 1.6x 8.3x

Window / DoorMasonite International Corp. $47.03 62.5% $1,247.3 $1,862.7 $2,150.3 $260.1 12.1% 0.9x 7.2xQuanex Building Products Corp. $13.35 55.6% $445.1 $626.6 $889.8 $89.7 10.1% 0.7x 7.0xAverage 59.1% $846.2 $1,244.7 $1,520.0 $174.9 11.1% 0.8x 7.1x

Lumber / Wood ProductsBoise Cascade Co. $23.30 47.3% $906.6 $1,186.5 $5,021.5 $256.5 5.1% 0.2x 4.6xLouisiana-Pacific Corp. $21.37 66.4% $3,017.0 $2,384.1 $2,949.5 $800.2 27.1% 0.8x 3.0xUniversal Forest Products $26.22 66.5% $1,616.6 $1,807.9 $4,467.1 $253.5 5.7% 0.4x 7.1xAverage 60.1% $1,846.7 $1,792.8 $4,146.0 $436.7 12.6% 0.5x 4.9x

Building Product DistributionBeacon Roofing Supply $31.67 47.6% $2,158.5 $5,048.3 $6,418.3 $460.6 7.2% 0.8x 11.0xBuilders FirstSource $10.98 47.2% $1,259.7 $3,066.8 $7,687.7 $438.0 5.7% 0.4x 7.0xGMS $15.78 40.6% $649.8 $1,842.2 $2,833.3 $240.4 8.5% 0.7x 7.7xHD Supply Holdings $36.57 79.0% $6,513.6 $8,452.6 $5,784.0 $788.0 13.6% 1.5x 10.7xWatsco $147.43 76.4% $5,099.1 $5,441.5 $4,519.7 $397.2 8.8% 1.2x 13.7xAverage 58.2% $3,136,1 $4,770.3 $5,448,60 $464.8 8.8% 0.9x 10.0x

EV = enterprise value; LTM = last twelve months$ in millions, except per share dataNM = Not Meaningful

9

The table below includes financial results and valuation multiples for select publicly-traded, US-based Building Product &Construction Materials companies.

Source: FactSet

Source: Capital IQ


FIRM TRACK RECORD

10

Capstone Headwaters Building Products & Construction team has represented clients across various construction specialties.Our deep industry focus allows us to provide our clients with real-time transaction feedback and immediate access to keydecision makers among the most active acquirers and investors in the construction industry. A sampling of closedtransactions are shown below.

has been acquired by



has been recapitalized byhas been acquired by



a portfolio company of


a portfolio company of

has been recapitalized in partnership with

1. Associated Builders and Contractors (ABC), “Contractors Lose Confidence in Q3 but Remain Upbeat, According to ABC’s Latest Construction Confidence Index,” http://www.abc.org/News-Media/News-Releases/entryid/15965/contractors-lose-confidence-in-q3-but-remain-upbeat-according-to-abc-s-latest-construction-confidence-index, accessed December 21, 2018.

2. AK Steel, Investor Presentations, “BAML Leveraged Finance Conference 2018,” https://ir.aksteel.com/events-and-presentations/presentations, accessed December 17, 2018.

3. New England Building Supply, The Impact of Canadian Lumber Tariffs for the Boston Building Industry, https://nebldgsupply.com/canadian-lumber-tariffs-for-boston-building-industry/, accessed December 20, 2018.

4. National Lumber and Building Material Dealers Association, “NLBMDA Statement on the United States-Mexico-Canada Agreement,” https://myemail.constantcontact.com/NLBMDA-Commends-Signing-of-New-U-S--Mexico-Canada-Trade-Agreement.html?soid=1128936002705&aid=lGuyf231Gxw, accessed December 20, 2018.

5. US Census Bureau, “Monthly New Residential Construction,” https://www.census.gov/construction/nrc/pdf/newresconst.pdf, accessed December 19, 2018.

6. Yardi Matric, “Multifamily National Report: November 2018,” https://www.yardimatrix.com/Publications, accessed December 21, 2018. 7. National Association of Home Builders, “Remodeling Confidence Remains Solid in Third Quarter,” https://www.nahb.org/en/news-and-

publications/press-releases/2018/10/remodeling-confidence-remains-solid-in-third-quarter.aspx, accessed December 20, 2018. 8. The American Institute of Architects, “Architecture Billings Index (ABI),” http://content.aia.org/sites/default/files/2018-

12/ABI_Infographic_Nov%E2%80%93Dec_2018_V1_full_size.pdf, accessed December 20, 2018. 9. Clayton, Dubilier & Rice, “Ply Gem Holdings, Inc. Enters into a Definitive Agreement to be Acquired by Clayton, Dubilier & Rice,”

https://www.cdr-inc.com/news/press-release/ply-gem-holdings-inc.-enters-definitive-agreement-be-acquired-clayton-Dubilier, accessed December 17. 2018.

10. Andersen Corporation, “Andersen Corporation Announces Sale of Silver Line Division to Ply Gem,” https://www.andersencorporation.com/news/2018-08-andersen-corporation-announces-sale-of-silver-line-division-to-ply-gem/, accessed December 17, 2018.

11. NCI Building Systems, “NCI Building Systems Announces Closing of Merger Transaction with Ply Gem,” https://www.ncibuildingsystems.com/about-nci/news/2018/11/nci-building-systems-announces-closing-of-merger-transaction-with-ply-gem, accessed December 17, 2018.

12. Boral, “Boral sells US Block Business for US$156 million,” https://www.boral.com/sites/corporate/files/media /field_document/Boral-sells-US-Block-business.pdf, accessed December 14, 2018.

13. PGT Innovations, “PGT INNOVATIONS TO ACQUIRE WESTERN WINDOW SYSTEMS,” http://ir.pgtinnovations.com /~/media/Files/P/PGT-Innovations-IR/documents/annual-reports/final-project-coyote-transaction-presentation-01002499-3xa26ca.pdf, accessed December 14, 2018.

14. BlueLinx Holdings, “BlueLinx Holdings to Acquire Cedar Creek Holdings,” https://bluelinxholdingsinc.gcs-web.com/static-files/0d1fb153-0038-4a06-8cea-e59dc0cb1d1c, accessed December 14, 2018.

15. USG Corporation, “Knauf and USG Agree to Transaction at $44 Per Share in Cash,” https://usg.gcs-web.com/news-releases/news-release-details/knauf-and-usg-agree-transaction-44-share-cash, accessed December 17, 2018.

16. Beacon Roofing Supply, “Beacon Roofing Supply Completes Its Acquisition of Allied Building Products,”http://ir.beaconroofingsupply.com/news-releases/news-release-details/beacon-roofing-supply-completes-its-acquisition-allied-building, accessed December 17, 2018.

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CITATIONS

Disclosure: This report is a periodic compilation of certain economic and corporate information, as well as completed and announced merger and acquisi-tion activity. Information contained in this report should not be construed as a recommendation to sell or buy any security. Any reference to or omission ofany reference to any company in this report should not be construed as a recommendation to buy, sell or take any other action with respect to any security ofany such company. We are not soliciting any action with respect to any security or company based on this report. The report is published solely for thegeneral information of clients and friends of Capstone Headwaters. It does not take into account the particular investment objectives, financial situation orneeds of individual recipients. Certain transactions, including those involving early-stage companies, give rise to substantial risk and are not suitable for allinvestors. This report is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be reliedupon as such. Prediction of future events is inherently subject to both known and unknown risks and other factors that may cause actual results to varymate- rially. We are under no obligation to update the information contained in this report. Opinions expressed are our present opinions only and aresubject to change without notice. Additional information is available upon request. The companies mentioned in this report may be clients of CapstoneHeadwaters. The decisions to include any company in this report is unrelated in all respects to any service that Capstone Headwaters may provide to suchcompany. This report may not be copied or reproduced in any form, or redistributed without the prior written consent of Capstone Headwaters. Theinformation contained herein should not be construed as legal advice.


Darin is a recognized expert witness and speaks nationally regarding merger and acquisitions.Courts and clients appreciate his ability to synthesize large amounts of complex businessinformation and present it in concise terms that are clearly understood by all parties. Trade groupsand national publications haverecognized Darin’s business acumen and technical knowledge.

Prior to joining Capstone Headwaters, Darin started, operated, made acquisitions and sold threesuccessful companies in construction, import and distribution, and commercial real estatemanagement. Over a two year period, he implemented the turnaround of the underperformingbusiness units of a publicly held national franchisor.

Three sell side transactions that Darin performed are published and taught in business schoolsaround the globe. Darin teaches these cases at the University of Denver, where he received hisBachelor of Science in Finance.

Prior to joining Capstone Headwaters in 2011, Brian spent five years with a boutique investmentbank performing sell-side transactions, financial modeling and value-add client services. AtCapstone Headwaters, Brian is a member of the Building Products & Construction Services teamassisting clients with sell-side, buy-side and debt and equity raise transactions.

Prior to his career in Investment Banking, Brian developed construction industry and operationsexperience owning and managing a successful family-owned residential construction company. Hiseducation and industry expertise are resources used in all aspects of the transaction process.

Brian graduated from the University of Northern Colorado with a BS degree in Finance and he is aCFA Charterholder.

BUILDING PRODUCTS REPORT CONTRIBUTORS

Brian KrehbielSenior Vice President [email protected] | 970-215-9572

Darin GoodManaging Director [email protected] | 303-549-5674


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MIDDLE MARKET INVESTMENT BANK OF

THE YEAR

2017

US ‐ DEBT FINANCING ADVISORY OF THE YEAR

2018

US ‐ GAMECHANGER OF THE YEAR

2018

US MIDDLE MARKETS INVESTMENT BANK

OF THE YEAR

2018

BUILDING PRODUCTS REPORT CONTRIBUTORS (CONTINUED)

Dominic has spent the entirety of his investment banking career with Capstone Headwaters, primarilyfocusing on sell-side M&A. In addition to 2017’s Cross Border Deal of the Year, Dominic hasexecuted deals ranging from $30mm to $200mm across a wide-range of industries, includingIndustrial Manufacturing, Industrial Technology, Transportation & Logistics, TMT and Healthcare &Life Sciences. Dominic’s primary responsibilities are creating process materials, performing financialand operational analysis, data room population and management as well as coordinatingmanagement presentations.

Prior to joining Capstone Headwaters, Dominic was a professional soccer player with the UnitedStates Soccer Federation, including as a member of the 2008 Beijing Olympic Games, and the CelticFootball Club. Dominic graduated cum laude from the University of Denver with a degree in Financeand Accounting.

Dominic CerviVice [email protected] | 303-531-4605


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Crista started her career at KPMG LLP where she audited a wide range of businesses from small non-profit to large Fortune 100 companies. Crista then accepted a Senior Associate role with a $12billion multi-strategy hedge fund managing the monthly PnL close process for several funds. Shewas promoted to Vice President, Valuations responsible for pricing the portfolio of over 8,000securities monthly, as well as reporting to the Valuation Committee on a bi-monthly basis.At Capstone Headwaters, Crista works with clients to improve their financial metrics and reportingcapabilities. Additionally, she performs research, valuation analysis, prepares marketingdocumentation, manages client data rooms and responds to due diligence inquiries.Crista graduated summa cum laude from Drake University with a degree in Finance and Accounting.She also earned a Master’s of Accounting degree from Drake University and is a CFA Charterholder.

Crista GilmoreVice [email protected] | 303-531-5013

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www.capstoneheadwaters.com

Capstone Headwaters is an elite investment banking firm dedicated to serving the corporate finance needs of middle marketbusiness owners, investors and creditors. Capstone Headwaters provides merger & acquisition, private placement, corporaterestructuring and financial advisory services across 16 industry verticals to meet the life cycle needs of emerging enterprises.Headquartered in Boston, MA and Denver, CO, Capstone Headwaters has 19 offices in the US, UK and Brazil with a globalreach that includes over 300 professionals in 33 countries.

BUILT FOR THE MIDDLE MARKET

INTERNATIONAL300+ professionals

37 offices in 33 countries

Argentina BelgiumBrazil Canada Chile China

Colombia Croatia Czech Republic DenmarkEgypt Finland France Germany Hungary India

Ireland Italy Japan Mexico Morocco NetherlandsNorway Peru Poland Russia Spain Sweden Switzerland

Turkey United Arab Emirates United Kingdom Vietnam

UNITED STATES160+ professionals17 offices

Boston Boise Burlington Chicago Dallas Denver Greenwich HoustonLos Angeles New York Orange County Philadelphia San Diego San Francisco St Louis TampaWashington DC

Documents

FINAL Capstone Headwaters Building Products M&A …