Rock Products’ Aggregate Industry Market Report

Figure5 600
In This Exclusive Analysis prepared for Rock Products, Headwaters MB Looks at Current Market Trends Such as Mergers and Acquisitions, Aggregate Production and Pricing.

By Brian Krehbiel


The worldwide aggregates industry is dominated by a handful of large players. The merger of Holcim and Lafarge, completed July 10, 2015, further defined the industry creating a clear-cut leader. Valuation multiples (Figure 1, includes constituents of Headwaters Aggregates Materials Index) are up and continue to grow particularly for U.S. based aggregates producers including Vulcan Materials and Martin Marietta Materials with EBITDA multiples in the 20.0x range. The publicly traded aggregates industry as a whole is trading at an average EBITDA multiple of 12.1x.

Figure 1: Public Valuation Multiples
  All $’s in Millions EBITDA Enterprise Value/
Company Name TEV Revenue EBITDA Margin Revenue EBITDA
LafargeHolcim Ltd. 31,001 18,830 3,633 19.3% 1.65x 8.2x
CRH plc 22,931 19,958 1,702 8.5% 1.15x 13.2x
CEMEX, S.A.B. de C.V. 26,225 13,934 2,630 18.9% 1.88x 9.9x
HeidelbergCement AG 19,631 13,279 2,220 16.7% 1.48x 8.1x
MDU Resources Group Inc. 5,609 4,666 859 18.4% 1.20x 6.5x
Vulcan Materials Company 14,666 3,155 679 21.5% 4.65x 21.6x
Martin Marietta Materials, Inc. 12,769 3,180 708 22.3% 4.02x 18.0x
Buzzi Unicem SpA 4,038 2,570 389 15.1% 1.57x 9.0x
Summit Materials, Inc. 2,150 1,288 174 13.5% 1.67x 12.3x
Eagle Materials Inc. 4,571 1,085 313 28.8% 4.21x 12.9x
Headwaters Incorporated 1,968 869 148 17.0% 2.27x 13.4x
U.S. Concrete, Inc. 1,028 793 85 10.7% 1.30x 12.1x
Mean 12,216 6,967 1,128 17.6% 2.3x 12.1x
Median 9,189 3,167 693 17.7% 1.7x 12.2x

*TEV = Total Enterprise Value (Market Capitalization + Net Debt)

Source: Capital IQ

Merger & Acquisition Activity

A large portion of the U.S. M&A activity in 2015 related to acquisitions and divestures (Figure 2) associated with regulatory approval of the Holcim/Lafarge merger, which closed on July 10, 2015. Subsequent required divestitures of certain assets have since been completed including transactions with ESSROC Cement Corp. and Continental Cement Company.

Figure 2: Recent Industry M&A Activity
Transaction Date Target/Issuer Buyers/Investors Transaction Value ($mm) Sellers
08/28/2015 E&A Materials, Inc., Select Assets & Pitts Sand & Gravel, Inc., Select Assets U.S. Concrete, Inc. (NasdaqCM:USCR) Undisclosed E & A Materials Inc. & Pitts Sand & Gravel, Inc.
08/04/2015 Martin Marietta Materials, Inc., California Cement Business Assets CalPortland Company, Inc.               420.0 Martin Marietta Materials, Inc. (NYSE:MLM)
08/04/2015 3 aggregates facilities and 7 RMC operations in AZ & NM Vulcan Materials Company (NYSE:VMC) 21.4
07/24/2015 Holcim Ltd., Cement Facilities in USA ESSROC Cement Corp. Undisclosed Holcim Ltd. (SWX:HOLN)
07/17/2015 Lafarge North America Inc., Cement Assets Continental Cement Company, LLC Undisclosed Lafarge North America Inc.
06/11/2015 Oldcastle Surfaces, Inc. Seven Stone Surface Fabrication, Inc.                    7.7 Oldcastle, Inc.                            (CRH plc)
06/01/2015 DuBROOK Concrete, Inc. U.S. Concrete, Inc. (NasdaqCM:USCR) 12.0 Undisclosed
5/4/2015     Announced Holcim (US) Inc., Slag Grinding Plant in Chicago Eagle Materials Inc. (NYSE:EXP)                 30.0 Holcim (US) Inc.
04/02/2015 Ferrara Brothers Building Materials Corp. U.S. Concrete, Inc. (NasdaqCM:USCR) 60.0 Joseph A. Ferrara, Leonard A. Ferrara and family
03/17/2015 Continental Cement Company, LLC Summit Materials Holdings L.P. Undisclosed Summit acquired remaining stake
02/24/2015 Right Away Redy Mix, Inc. U.S. Concrete, Inc. (NasdaqCM:USCR) Undisclosed Undisclosed
Source: Capital IQ      
Private Equity Backed Valuations

Although merger & acquisition activity has been dominated by strategic acquirers as of late, private equity capital investment has returned to the post-recession construction industry. GF Data, a provider of detailed information on business transactions ranging in size from $10 million to $250 million, breaks down private equity transactions by industry and quantifies the average valuation multiple of revenue and earnings paid based on the purchase price. Figure 3 provides detail on the average size of transactions by NAICS code including transaction multiples for several aggregates related industries.

Figure 3: Private Equity Transaction Valuation Data
NAICS Code: 3273 Cement and Concrete Product Manufacturing  
TEV Range TEV ($mm) Revenue ($mm) EBITDA Margin TEV/Revenue TEV / EBITDA
25 – 100 $48.0 $45.7 17.6% 1.1x 6.8x
NAICS Code: 3279 *Other Nonmetallic Mineral Product Manufacturing
TEV Range TEV ($mm) Revenue ($mm) EBITDA Margin TEV/Revenue TEV / EBITDA
10 – 50 $27.8 $24.0 20.8% 1.2x 5.7x
* Subsector transforms mined or quarried nonmetallic minerals, such as sand, gravel, stone, clay, and refractory materials, into products for intermediate or final consumption.
NAICS Code: 2123 Nonmetallic Mineral Mining and Quarrying   
TEV Range TEV ($mm) Revenue ($mm) EBITDA Margin TEV/Revenue TEV / EBITDA
25 – 250 $69.3 $57.8 22.0% 1.2x 5.7x
Results are transaction averages for each NAICS code. TEV = Total Enterprise Value
Source: GF Data      
Private Equity Holdings

Private equity capital’s return to the construction industry has resulted in a number of aggregates related investments. A sampling of current U.S. private equity backed aggregates companies is included in Figure 4.

Figure 4: Sample of U.S. Private Equity Backed Aggregates Companies
Investment Firm City State Select Current Investment(s)
Altus Capital Partners Wilton CT Rocla Concrete Tie
ARGUS Capital Partners London UK Calucem, Inc.
Banyan Venture Partners Salt Lake City UT Metro Readymix
Gateway City Capital Investors Carlyle IL American Pavement Preservation
Goldman Sachs (GS Capital Partners VI Fund) New York NY Associated Asphalt Inc.
J.H. Whitney & Co. New Canaan CT FNF Construction, Inc.
JLL Partners New York NY Pioneer Sand Company, Inc.
Lindsay Goldberg New York NY Axeon Specialty Products, Bluegrass Materials Co.
Marwit Capital Newport Beach CA Western Emulsions, Inc.
Merit Capital Partners Chicago IL B.E.T.-ER Mix Inc.
Prophet Equity South Lake TX Ace Asphalt of Arizona, Inc.
Salt Creek Capital San Francisco CA Rock Ridge Stone Inc.
ShoreView Industries New Canaan MN Angelle Concrete Group
Starboard Capital Partners New York CT Jersey Precast Corp., Bright-Line Technologies
The Freedom Group New York IL DiCicco Concrete Products, Kieft Brothers Inc.
Thompson Street Capital Partners St. Louis MO Stone Panels, Inc.
Westward Partners Seattle WA JMB Crushing Systems, Kalinko Enterprises Ltd.
WL Ross & Co. New York NY PB Materials Holdings, Permian Basin Materials
Source: Capital IQ      
Aggregates Performance

Over the past 10 years, major market indices outpaced growth in the aggregates industry (Figure 5), due in large part to the recession, but thus far in 2015 publicly traded aggregates producers are outperforming the S&P 500 and the Dow Jones Industrial Average (DJIA) (Figure 6). The publicly traded aggregates producers have generated a positive return this year while both the DJIA and S&P 500 returns turned negative for the year in August.

Figure6 600

Aggregates Material Trends

Average industry pricing data shows cement, ready-mix concrete, sand & gravel and crushed stone prices increasing while asphalt prices plateaued and have begun to decline as a result of lower oil prices. Volumes have generally been increasing with the exception of asphalt which has been flat the last several years. Year-to-date cement, crushed stone and sand & gravel volumes have increased over the prior year.


Domestic production of cement in 2014 increased to ~81 million tons through output from 97 plants in 34 states. Production continues to be well below the record level of 99 million tons in 2005. 1


Asphalt pavement accounts for over 90% of road infrastructure in the United States. Government funding for highways is expected to increase in 2015 resulting in increased demand/revenue for asphalt producers.

Ready-Mix Concrete

The residential and non-residential building markets each consume approximately one-third of U.S. output. The final one-third is used for highways and utilities construction. The outlook is promising because construction markets for ready-mix concrete are all expected to experience growth over the next five years. 2

Crushed Stone

In 2014, 1.26 billion metric tons of crushed stone was produced by 1,550 companies operating 4,000 quarries, 91 underground mines, and 210 sales/distribution yards in 50 States. 1

Sand & Gravel

Construction sand and gravel valued at $7 billion was produced by an estimated 4,100 companies and government agencies from about 6,600 operations in 50 States. 1

USCement 300

Source: U.S. Geological Survey
USReadyMix 300

Sources: NRMCA Industry Data Survey, Average RMC selling price of U.S. Concrete, Vulcan Materials, Martin Marietta Materials & Eagle Materials
USAsphalt 300

Sources: EAPA Asphalt in Figures, Vulcan Materials & Martin Marietta Materials average of net asphalt selling prices
USCrushedStone 300

Source: U.S. Geological Survey
USSandGravel 300

Source: U.S. Geological Survey

Headwaters MB is an independent, middle-market investment banking firm providing strategic merger and acquisition, corporate finance, and merchant banking services through proprietary sources of capital. Named “Investment Bank of the Year” by the M&A Advisor in 2014, Headwaters MB is headquartered in Denver, with six regional offices across the United States and partnerships with 18 firms covering 30 countries. For more information, visit To discuss any information contained in this report, contact the Headwaters MB team: Darin Good, managing director, [email protected], 303-549-5674; Brian Krehbiel, vice president, [email protected], 303-531-5008 and Charlotte Franson, vice president, [email protected], 303-809-8980.

1 U.S. Geological Survey, Mineral Commodity Summaries, January 2015

2 IBISWorld, Asphalt Manufacturing in the US Industry Report, May, 2015

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