Raleigh, N.C. investment banking services provider FMI Capital Advisors analyzes key economic factors affecting cement, aggregate, concrete and asphalt producers last year as well as their implications for this year in “Capturing the Momentum: Construction Materials Review of 2020 and Outlook for M&A in 2021.”
“Throughout 2020, market sentiment operated like a pendulum, swinging back and forth between certainty and uncertainty,” says FMI Construction Materials Group Managing Director George Reddin, report co-author. “By the end of the year, optimism, earnings, and merger & acquisition activity all began picking up, allowing the construction materials industry to finish strong. FMI expects this trend to continue into 2021, driven by new potential for funding, vaccine progress, and a surprisingly robust residential market.”
In “Capturing Momentum,” he and FMI Managing Director Scott Duncan observe:
- Beyond the global health crisis, 2020 was already set to be a pivotal year for construction materials, as federal infrastructure funding was in the spotlight with the Fixing America’s Surface Transportation (FAST) Act set to expire in September.
- Questions and uncertainty created an anemic merger & acquisitions market for construction materials in the first half of 2020. As the year progressed, activity picked up, ultimately ending with a strong fourth quarter.
- Many buyers have started 2021 with well-structured balance sheets and access to low-interest debt. Election results are signaling the anticipation of new federal infrastructure funding, with construction materials operators poised to benefit. Public companies in the sector are seeing boosts in their stock values, encouraging an acquisitive atmosphere.
- The promise of capturing future earnings through solid economic fundamentals creates an attractive landscape for construction materials mergers & acquisitions. FMI is bullish on the current market for both buyers and sellers.
HOMEOWNER MOBILITY
Moving patterns per U-Haul rental activity
In “Capturing the Momentum,” FMI illustrates regional homebuilding market activity by charting a telling metric: U-Haul rental rates as measured by vehicle destinations. Movers are bound to incur higher costs for dropping off vans or trucks in metropolitan areas experiencing above normal growth. Accounting and professional services giant PricewaterhouseCoopers prepared the map based on a John Burns Real Estate Consulting analysis of U-Haul pricing data.
SURVEY: COMMUNICATIONS PARAMOUNT IN ARCHITECTURE/ENGINEERING/CONSTRUCTION
American Concrete Institute-aligned consultant Advancing Organizational Excellence (AOE) has announced the results of its 2020 marketing trends survey, conducted to identify how the Covid-19 pandemic altered business operations and what is expected in 2021. Respondents to the online survey included professionals in architecture, engineering, construction, chemical and other technical industries from across the United States. Among key findings:
- Nearly 75 percent of respondents anticipate last year’s changes in business operations or strategies will continue in 2021.
- The most common change to business operations entails arrangements for some or all employees to work remotely, holding virtual meetings and events, and increasing the role of online training. With so many working remotely, employee communication became more important.
- Holding weekly virtual staff meetings, rotating staff coming into the office in small groups, checking in with staff members individually through regular phone calls, instant messaging, and virtual calls were ways that organizations kept their employees engaged.
- Respondents noted that almost half of employees who worked in an office setting prior to the pandemic have returned to the office. Most of those who have not returned to the office are planning to return within the next year.
- Adjusting strategic marketing plans and focusing on building relationships virtually by relying on social media, webinars and virtual meetings were changes to the marketing and sales process that are likely to continue this year.
- Survey participants indicated that, along with being forced into a virtual realm, many organizations revised product and service delivery processes while also cutting budgets, especially those for marketing, sales, travel and training.
- Although there is apprehension about the economy, participants also worry about maintaining business operations with smaller budgets and finding a qualified workforce.
“This survey validates that our business norms and communication methods have changed, likely forever,” says AOE President Kimberly Kayler, CPSM. “The role of marketing and communication has never been more integral to the success of an organization.” — Advancing Operational Excellence, Farmington Hills, Mich., www.aoeteam.com