Steady Sailing Through Uncharted Waters: A Look at 2019, 2020 and M&A Landscape for the Construction Materials Industry
2019 was a steady sailing year for the construction materials (CM) market, with many industry participants achieving robust volumes and revenues.
Broadly speaking, last year’s performance was driven by improved weather, strong backlogs and state-level infrastructure funding. These
improvements benefited both public and private CM producers. Despite the strong operating performance, M&A started the year off slowly, as
anticipated by FMI in our previous annual review titled “Understanding the Balance."
After grappling with 2018 stock declines and recession concerns, buyers needed to see a return to stability before they resumed investing in acquisitions. The solid performance of 2019 eventually led to positive stock price appreciation for CM buyers and created favorable tailwinds for the M&A market. By the end of the year, M&A had returned to a more normal pace, with optimism continuing into 2020. CM buyers generally enter 2020 with capital availability, positive state infrastructure spending and reasonable stock valuations (relative to historic EV/EBITDA metrics). Accordingly, FMI projects a rebound in M&A activity, despite some concerns about economic uncertainty looming in the future.
