Rock Products’ Aggregate Industry Market Report

In This Exclusive Third-Quarter Analysis Prepared For Rock Products, Headwaters MB Looks At Current Market Trends Such As Mergers And Acquisitions, Aggregate Production And Pricing.

By Brian Krehbiel


A handful of large publicly traded companies control the worldwide aggregates industry. Valuation multiples (Figure 1, includes the constituents of Headwaters Aggregates Materials Index) remained high in Q3, 2015 and average gross profit margins and average EBITDA margins increased 2.1 percent and 2.3 percent, respectively compared to the same period in 2014. The publicly traded aggregates industry as a whole was trading at an average EBITDA multiple of 11.6x at the end of Q3, 2015.

Figure 1: Public Valuation Multiples
  All $’s in Millions EBITDA Enterprise Value/
Company Name TEV Revenue EBITDA Margin Revenue EBITDA
LafargeHolcim Ltd. 43,507 20,110 3,880 19.3% 2.26x 11.3x
CRH plc 23,047 22,231 1,896 8.5% 1.03x 11.9x
CEMEX, S.A.B. de C.V. 23,893 13,396 2,456 18.3% 1.84x 9.7x
HeidelbergCement AG 21,188 14,948 2,542 17.0% 1.43x 7.8x
MDU Resources Group, Inc. 5,772 4,733 874 18.5% 1.24x 6.7x
Vulcan Materials Company 13,852 3,320 746 22.5% 4.39x 20.4x
Martin Marietta Materials, Inc. 11,796 3,267 766 23.4% 3.71x 16.7x
Buzzi Unicem SpA 4,440 2,912 441 15.1% 1.55x 8.9x
Summit Materials, Inc. 1,923 1,365 231 16.9% 1.49x 11.0x
Eagle Materials, Inc. 3,963 1,129 315 27.9% 3.65x 11.1x
Headwaters Incorporated 1,865 895 155 17.3% 2.15x 12.7x
U.S. Concrete, Inc. 962 891 107 12.0% 1.21x 11.4x
Mean 13,018 7,433 1,201 18.1% 2.2x 11.6x
Median 8,784 3,293 756 17.8% 1.7x 11.2x
*TEV = Total Enterprise Value (Market Capitalization + Net Debt)  
Aggregate Materials Index – Company Spotlight

U.S. based aggregates providers experienced growth in volume, pricing and margins in Q3, 2015.

Vulcan Materials’ announcement of Q3 results included an increase in revenue of $165 million, or 19 percent, to $1.038 billion and adjusted EBITDA grew 31 percent as margins improved when compared to the same period in 2014. Total aggregates shipments increased 10 percent, or 4.8 million tons, to 52.6 million tons. In its core aggregates segment, Vulcan delivered its ninth consecutive quarter of year-over-year improvements in both shipments and per-ton margins. No material acquisitions or divestitures were completed in Q3 by Vulcan Materials.

Martin Marietta recently reported record Q3 results with net sales of $1.0 billion, an increase of 9.5 percent over the same period in 2014 while gross margins improved by 4.8 percent. Both aggregates volume and product line price increased 5.4 percent during the quarter. On Sept. 30, 2015, Martin Marietta completed the sale of its California cement business to CalPortland Cement Co. for $420 million. Proceeds from the sale are being used to repurchase shares of the company’s stock.

Summit Materials announced Q3 results of operations, which far exceeded totals for the same period in 2014. Net revenue increased 22.4 percent and revenue and volume increased for all product lines and in all U.S. regions. The acquisition of Davenport Assets, a cement plant and a quarry in Davenport, Iowa, and seven cement terminals along the Mississippi River, in July and LeGrand Johnson Construction Co., a vertically integrated construction materials company based in Utah, in August helped to bolster Summit’s Western and Central region territory coverage and revenue growth in Q3.

Merger and Acquisition Activity

Acquisition activity continued in Q3 as aggregate producers made strategic acquisitions of mineral reserves and completed divestitures of non-core business assets (Figure 2). A large portion of the U.S. M&A activity in Q3, 2015 stemmed from acquisitions and divestures associated with regulatory approval of the Holcim/Lafarge merger, which closed on July 10, 2015.

Figure 2: Recent Industry M&A Activity
Transaction Date Target/Issuer Buyers/Investors Transaction Value ($mm) Sellers
10/9/2015                      (Announced 09/25/2015) CEMEX, Inc., Gypsum Wallboard Business US LBM Holdings, LLC Undisclosed CEMEX, Inc.
09/28/2015 The Wantage Stone U.S. Concrete, Inc. (NasdaqCM:USCR) Undisclosed
09/10/2015 North Jay White Quarry, Boreal Quartz Quarry and St. Clair Quarry Polycor, Inc. Undisclosed
09/04/2015 Ashmore Bros Rogers Group, Inc. Undisclosed Ashmore Family
08/04/2015 Martin Marietta Materials, Inc., California Cement Business Assets CalPortland Company, Inc. 420.0 Martin Marietta Materials, Inc. (NYSE:MLM)
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.
08/24/2015 LeGrand Johnson Construction Co Kilgore Companies                                              (Summit Materials) Undisclosed Johnson Family
08/05/2015 Art Wilson Company ACG Materials Undisclosed
7/28/2015                             (Announced) Italcementi SpA (BIT:IT) HeidelbergCement AG (DB:HEI)          6,448.5 First Eagle Investment Management, LLC
07/24/2015 Holcim Ltd., Cement Facilities in USA ESSROC Cement Corp. Undisclosed Holcim Ltd. (SWX:HOLN)


Lafarge North America, Inc., Cement Assets Continental Cement Company, LLC Undisclosed Lafarge North America, Inc.
07/13/2015 KSA Limited Partnership Rocla Concrete Tie, Inc. Undisclosed Koppers Inc.; Lehigh Hanson, Inc.
07/01/2015 Addiment Italia S.r.l. Sika AG (SWX:SIK) Undisclosed Buzzi Unicem SpA (BIT:BZU)
Private Equity Transaction Activity & Valuations

GF Data, 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 3 provides the number of completed transactions from GF Data’s contributors, the average EBITDA multiple and the average amount of debt utilized in the transaction computed as a multiple of EBITDA. The data, although not industry specific, does show that valuations and leverage are on the rise but the number of transactions completed in Q3, 2015 is substantially lower than the prior quarter and the same period last year.

Figure 3: Private Equity Valuations & Leverage
All Transactions Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015
# of Transactions 41 53 50 64 63 51 37
TEV/EBITDA 6.4x 6.6x 6.7x 7.0x 7.0x 6.4x 7.1x
Total Debt/EBITDA 3.6x 4.0x 3.7x 3.7x 4.0x 4.0x 4.1x
Senior Debt/EBITDA 2.4x 2.9x 2.7x 2.7x 3.3x 2.9x 3.2x
Source: GF Data              
Aggregates Performance

Over the past 10 years, major market indices outpaced growth in the aggregates industry (Figure 4), 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 5). Publicly traded aggregates producers were performing well in early 2015 but returns for the Aggregate Materials Index recently turned negative for the year while annual returns have been negative for the DJIA and S&P 500 since August.

Source: S&P Capital IQ

Source: S&P Capital IQ
Industry News

The U.S. House of Representatives and Senate recently voted to approve the Fixing America’s Surface Transportation (FAST) act. On Dec. 4, 2015, President Obama signed the bill into law. The five year, $305 billion highway and transit bill is the first long-term transportation legislation to be passed in a decade. There have been dozens of extensions since the last four year bill expired in 2009.1 Although the funding totals will not change drastically from prior years (11 percent increase over five years), the uncertainty around the U.S. commitment to future infrastructure funding has ended.

Aggregates Material Trends

Average industry pricing data shows cement, ready-mix concrete, sand and 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. The recently passed FAST act should bolster demand for asphalt over the next five years. Year-to-date cement, crushed stone and sand & gravel volumes have increased over the prior year.


Total shipments of portland and blended cement in the United States and Puerto Rico including imports for 2015 through September totaled 68.2 million tons, up by 3.2 percent from the same period in 2014.2

Crushed Stone

In the third quarter 2015, an estimated 406 million metric tons of crushed stone was produced and shipped for consumption in the U.S., an increase of 7.0 percent compared to the third quarter of 2014.2

Sand and Gravel

Sand and gravel production in the third quarter of 2015 was estimated at 291 million metric tons, an increase of 2.0 percent compared to the third quarter of 2014.2 

1 House, Senate Pass Five-Year Highway Bill, Rock Product News, December 4, 2015
2 U.S. Geological Survey


Source: U.S. Geological Survey

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

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

Source: U.S. Geological Survey

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.

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