Aggregates Industry Update – Q3 2022

In this quarterly report, Griffin Financial Group (“Griffin”) provides analysis and commentary on capital markets and valuation trends, mergers and acquisitions (“M&A”), and market research within the aggregates, building products, and construction materials industries. Industry tailwinds coupled with greater funding availability of infrastructure and commercial construction projects has helped offset margin compression from inflationary pressures. These tailwinds have provided strategics with significant pricing power in their respective markets, which has supported price momentum and their ability in incrementally increase material prices to offset inflation. M&A activity has continued at a rapid pace through YTD November 2022 as publicly traded strategics look to divest non-core assets and acquire bolt-on acquisitions with more favorable end market exposure. Below are the key trends in the aggregates industry highlighted in the report:

1. The aggregate industry still has significant tailwinds, despite a weak macroeconomic outlook
2. Acquisition multiples remain at record levels for quality assets, as M&A activity continues to be driven by strategic buyers
3. Major industry players continue to pursue strategic divestitures to optimize corporate assets and improve margins, as well as free up capital for growth
4. Adverse weather events continue to impact the broader construction industry, creating unexpected delays and more inflationary pressure for key cost inputs
5. Aggregate producers continue to face inflationary pressures from higher input costs, supply chain bottlenecks, and a tight labor market caused by COVID-19

Griffin Financial Group is an investment bank that provides M&A advisory, capital raising, ESOP, management buyout, structured finance, and strategic consulting services to the business services, commercial/industrial, financial institutions, health care, insurance, private equity, retail, and technology sectors, in addition to assisting businesses facing special situations.

For more information on Griffin’s scope of advisory services for the aggregates, building products, and construction materials industries, please contact John A. Lee, Senior Managing Director, at 610.205.6106, or Andrew D. Rudner, Senior Associate, at 610.205.6102.