Aggregate Industry Market Report


In This Quarterly Report, Provided Exclusively to Rock Products, Capstone Headwaters Provides Insight Into Merger & Acquisitions (M&A), Capital Markets Trends, Aggregate Production And Pricing Through Q3 2018.

By Darin Good and Brian Krehbiel

Capstone Headwaters’ Building Products & Construction Services Team advises industry business owners, entrepreneurs, executives and investors in the areas of merger and acquisitions, capital raising and various special situations advisory. Due to its background and laser focus within the industry, Capstone Headwaters is uniquely qualified and has an unparalleled track record of successfully representing Building Products & Construction companies.


Figure 1 includes the constituents of Capstone Headwaters Aggregates Materials Index as of 9/30/2018. Average EBITDA multiples declined from 14.4x at the end of Q2 2018 to 12.9x at the end of Q3 2018. Although revenue averages increased from Q2, EBITDA increased at a slower pace reducing the average EBITDA margin by 10 basis points to 17.6 percent.


Our Aggregates Materials Index has significantly underperformed the S&P 500 and the DJIA, declining by 14 percent YTD through Q3. Thus far in Q4 2018, the S&P 500 and DJIA have surrendered all YTD returns while the Aggregate Materials Index has dipped further into the red.


Preliminary estimates of total acquisition activity (Figure 3) in Q3 2018 demonstrate a decrease of 7.1 percent compared to the same period in 2017 in terms of the number of aggregates related transactions completed (26) in the US and Canada. Transaction activity was down 27.8 percent compared to Q2 2018, an above average quarter, but overall M&A activity in the sector remains robust. Publicly traded aggregates producers were notably active during the quarter including CEMEX, LafargeHolcim, U.S. Concrete and Oldcastle.


Private Equity Transaction Activity & Valuations

GF Data Resources, a provider of detailed information on business transactions ranging in size from $10 million to $250 million, provides quarterly data from over 200 private equity firm contributors on the number of completed 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 specific, shows the number of transactions completed rebounded closer to historical norms while average valuation multiples were relatively flat and senior debt levels declined slightly.



Picture1Net sales for LafargeHolcim on a like-for-like basis grew 5.8 percent in Q3 and by 5.1 percent for the first nine months of 2018 when compared to the prior-year period. All four business segments (cement, aggregates, ready-mix concrete and solutions and products) contributed to the sales increase. Recurring EBITDA growth outpaced sales at 8.1 percent in Q3 overcoming steep cost inflation in energy and logistics through volume growth and the effectiveness of its pricing and efficiency programs.

The LafargeHolcim Q3 earnings report offered the following outlook.

“The accelerated sales growth and over-proportional increase in Recurring EBITDA demonstrates the strength of Strategy 2022 – ‘Building for Growth’. This positive momentum is expected to continue in Q4 with the following underlying market trends:
• Continued growth in North America.
• Softer cement demand in Latin America.
• Strong markets in Europe.
• Challenging but stabilizing conditions in Middle East Africa.
• Continued demand growth in Asia .

Based on the above trends and positive momentum, the Net Sales guidance for 2018 is adjusted upwards to 4 to 6 percent on a like-for-like basis (compared to 3 to 5 percent as previously guided).”1

BuzziBuzzi Unicem reported an increase in year-to-date cement volume through Q3 of 3.1 percent while ready-mix concrete was down 1.8 percent compared to the prior year period. In the first nine months of 2018, sales volumes achieved by the group were higher than the level achieved in the previous year, thanks to changes in the scope of consolidation in Italy and Germany and the progress achieved in the Czech Republic, Poland and Russia. The U.S. market was negatively impacted by unprecedented rainfall, especially in September, and activity in Ukraine was significantly lower than in the prior year.

In the U.S., cement deliveries ran smoothly until August, but record levels of rainfall throughout the month of September in the Northeast, Texas and parts of the Midwest resulted in some of the lowest production figures on record and YTD revenue declined 7.2 percent compared to the prior year period.2

Notable Transaction

EuroviaAsphalt Plants & Paving Division of Lane Construction acquired by Eurovia (VINCI)
(Aug 20, 2018)

Eurovia signed an agreement with Salini Impregilo Group to acquire the Lane Asphalt Plants & Paving division of its subsidiary Lane Construction, for a total consideration of $555 million. These operations, based in 10 states on the East Coast and in Texas, generate more than $600 million in annual revenue and include approximately 40 asphalt-production plants and several quarries.

The acquisition complements Eurovia’s current operations in the United States where its subsidiaries Hubbard Construction and Blythe Construction operate in the Southeastern states of Florida, Georgia, North and South Carolina.

As a result of this acquisition, subject to regulatory approval in the United States, Eurovia will become one of the larger asphalt producers on the East Coast with total revenue of about $1.2 billion dollars.3


Construction input prices increased 0.3 percent in September and are up 7.4 percent on a year-over-year basis, according to an Associated Builders and Contractors (ABC) analysis of data recently released by the U.S. Bureau of Labor Statistics.



Industry results in Q3 2018 showed increases in volume compared to the same period in 2017 for cement (2.5 percent), crushed stone (3.6 percent), and sand and gravel (7.4 percent). Additionally, ready-mix concrete and asphalt both experienced increases in prices when compared to the prior year period.





1. Accelerated growth momentum with +5.8% in Net Sales LFL in Q3; Over-proportional increase in Recurring EBITDA of +8.1% LFL,, accessed December 10, 2018.
2. Operating Performance at September 30, 2018,, accessed December 10, 2018.
3. Eurovia, “Eurovia signs an agreement with Salini Impregilo Group to acquire the Asphalt Plants & Paving business of Lane Construction in the United States,”, accessed December 10, 2018.
4. US Geological Survey,, accessed December 18, 2018.

Capstone Headwaters is an elite investment banking firm dedicated to serving the corporate finance needs of middle market business owners, investors and creditors. Capstone Headwaters provides merger & acquisition, private placement, corporate restructuring and financial advisory services across 16 industry verticals to meet the lifecycle needs of emerging enterprises. Headquartered in Boston, MA and Denver, CO, Capstone Headwaters has 20 offices in the United States, United Kingdom and Brazil with a global reach that includes more than 300 professionals in 34 countries. For more information, visit To discuss any information contained in this report, contact the Capstone Headwaters team: Darin Good, managing director, [email protected], 303-549-5674; Brian Krehbiel, senior vice president, [email protected], 970-215-9572.

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