- 2016 will be the best year for US-focused M&A in the construction materials industry since the Great Recession, due to three factors: new competitive dynamics from recent mergers and acquisitions, recovering financial performance of public and private firms, and long-term certainty from the new federal highway bill. - Major mergers like LafargeHolcim and Heidelberg/Italcementi have reshuffled competition across the US, with over 20 cement plants changing ownership. This will drive new competitive dynamics across regional markets. - Both public and private construction materials firms are reporting their strongest financial results since before the Great Recession, with healthy balance sheets and earnings, making them well-positioned for M&

1. Recovery, FAST, and the Great Reshuffling
Why 2016 will mark the best year for U.S. focused M&A since the Great Recession
As we begin 2016, we cannot help but look back at
what a remarkable year 2015 was for the construction
materials industry. For many companies, 2015 marked their
best year of financial performance since the Great Recession.
In May, Summit Materials closed the industry’s first IPO in
over a decade. The largest deal in our industry’s history,
LafargeHolcim, closed in October. A host of additional M&A
reshuffled the competitive slate in markets across the country.
And last but not least, Congress and the President finally
came together in December after nearly a decade to pass a
long-term federal highway bill, the FAST Act.
While rising interest rates, overheated housing markets, and international political instability
provide some uncertainty, the construction materials industry is in a position of strength for the
first time since the onset of the Great Recession seven years ago. As we look forward, three fac-
tors – new competitive dynamics in the United States, recovering financial performance of both
public firms and smaller, independent players, and the certainty brought by long-term federal
highway funding – will make 2016 the best year for U.S. focused M&A since the Great Recession.
The Era of the Mega Deal
For two years, M&A activity in construction materials markets has been heavily dependent on
synergies. In other words, buyers have been unwilling to consummate transactions that did not
improve the profitability of the target company post-closing . This has had two primary effects:
first, smaller deals that traded were limited primarily to bolt-ons or tuck-ins, while beachhead
deal activity (deals in which a buyer enters a new geographic market) all but dried up. Second,
buyers gravitated towards mega deals with larger competitors in an effort to cut overhead costs
and strategically reposition assets. As the nearby table indicates, this dynamic resulted in nearly
$50 billion in mega deals over the past two years, making 2014 and 2015 the greatest two years
of construction materials M&A in history by dollar volume.
The reasons for the mega merger trend are myriad. Global economic growth coming out of the
2009 recession disappointed. The pre-recession acquisition boom left many acquirers with
overleveraged balance sheets and assets that underperformed expectations. With an uphill fight
to grow earnings organically, the merging of large companies allowed for substantial cost savings
and an opportunity to strategically reposition assets around the globe.
As the trend of the mega deal developed, it also took with it the focus of larger public acquirers.
This is for good reason: the LafargeHolcim merger alone required the strategic analysis,
valuation, and integration planning of a network of more than 180 cement plants, 1,600 ready
mix plants, 600 aggregate plants, and 115,000 employees around the globe.1
Other mega deals,
while comparatively smaller, are no less cumbersome for public companies to execute. As a
1
Excluding divested assets. Source: LafargeHolcim Registration Document, December 31, 2014.
George H. Reddin
Managing Director
FMI Capital Advisors, Inc.
Tel: 919.785.9286
Email: greddin@fminet.com
www.fminet.com
Scott C. Duncan
Director
FMI Capital Advisors, Inc.
Tel: 713.936.4930
Email: sduncan@fminet.com

2. Recovery, FAST, and the Great Reshuffling
Why 2016 will mark the best year for U.S. focused M&A since the Great Recession
2
Transaction Deal Value
LafargeHolcim Mergin $32 Billion
Oldcastle / LafargeHolcim Assets $7.4 Billion
Heidelberg / Italcementi $4.1 Billion
Martin Marietta / TXI $2.8 Billion
Summit Materials / LafargeHolcim Assets $450 Million
result, deals for smaller, regional independents across the United States have been more challenging to
execute, and sellers have seen fewer buyers interested in acquisition of their firms.
However, the tide is turning. While the U.S. economy is by no means booming as it did in the early
to mid-2000s, it is growing steadily. The emerging economies of Brazil, Russia, India and China, once
the focus of investment by large public construction materials firms, are struggling through a period of
currency devaluation, political instability, and general economic deterioration. The U.S. is now a critical
piece of the portfolio for public firms, and the competitive landscape here has shifted dramatically in
less than 24 months. As the dust settles, there can be little doubt that public acquirers will be looking at
opportunities to defend their newly shaped competitive positions in the United States.
The Great Reshuffling
The LafargeHolcim merger and Heidelberg / Italcementi deal, along with new cement capacity coming
online in Canada and New York are set to drive a dramatic competitive rebalancing in North America,
particularly in the eastern and central United States. Consider the following:
• The LafargeHolcim merger creates a network of 20 cement plants with over 33 Mt of installed
production capacity in North America (27.9Mt in the United States)2
;
• Newly public Summit Materials has more than doubled its cement production capacity and
terminal network along the Mississippi river through the acquisition of the former Lafarge
Davenport Cement plant and seven terminals;
• Oldcastle Materials has entered the cement market in the Northeastern United States and Eastern
Canada through the acquisition of the former Holcim cement assets in Ontario and Quebec and
related terminals;
• Heidelberg’s acquisition of Essroc includes five cement plants and a network of 18 terminals in the
eastern United States and a plant in Canada, significantly bolstering Heidelberg’s position in the
North America (through subsidiary Lehigh Hanson);
• The McInnis Cement plant, set to begin production in 2016, will bring an additional 2.5Mt of
waterborne production to the eastern United States and Canadian market.
• Lafarge’s Ravena plant modernization, which broke ground in April of 2014, is set to be completed
in mid-2016, and bring with it an incremental 1.1Mt in capacity to the market.
These developments have enormous competitive implications in downstream markets across the
United States. As seen in Figure 1, more than 20 cement plants in the U.S. have changed ownership or
extended their network of operations as a consequence of the LafargeHolcim or Heidelberg / Italcementi
deals. This will drive new competitive dynamics in markets from Maine to Michigan and southwards
down the Mississippi River to the Gulf Coast states. These new (and expensive) positions will create a
2
Ibid.
More than 20 cement plants
in the U.S. have changed
ownership or extended
their network of operations
as a consequence of the
LafargeHolcim or Heidelberg /
Italcementi deals. This will drive
new competitive dynamics in
markets from Maine to Michigan
and southwards down the
Mississippi River to the Gulf
Coast states.

3. Recovery, FAST, and the Great Reshuffling
Why 2016 will mark the best year for U.S. focused M&A since the Great Recession
3
need to defend downstream share in key markets through vertical integration. The fact that two of these
firms (Summit Materials and Oldcastle) have historically favored full integration through construction
will make it all the more interesting to watch.
Public Company Performance
Meanwhile, as the mega deal market has flourished, public construction materials companies have
reported their strongest financial performance since the onset of the recession. As a group, FMI’s
Construction Materials Index Companies (“CMI”) reported average EBITDA Margins in excess of 16.5%
for the last twelve months (Figure 2), their strongest performance since 2009. The Index’s median net
debt to EBITDA declined to 2.65 times in December, the lowest levels since 2007 (Figure 2). FMI’s CMI
companies are at their healthiest point since the recession.
Figure 1: Eastern US Cement Landscape in 2016
20.6% 21.0%
22.0% 22.6%
19.3%
16.7%
14.6%
13.7% 13.2% 13.8%
15.6%
16.7%
Figure 2: CMI Companies’ Average EBITDA Margin*
Newly Merged /
Acquired Plants
Legacy Plants
*FMI’s CMI Index includes
LafargeHolcim Ltd.
(SWX:LHN), CEMEX, S.A.B.
de C.V. (BMV:CEMEX CPO),
HeidelbergCement AG
(DB:HEI), CRH plc (ISE:CRG),
Vulcan Materials Company
(NYSE:VMC), Martin Marietta
Materials, Inc. (NYSE:MLM),
Eagle Materials Inc.
(NYSE:EXP), Buzzi Unicem SpA
(BIT:BZU), Summit Materials,
Inc. (NYSE:SUM), Granite
Construction Incorporated
(NYSE:GVA), Titan Cement
Company S.A. (ATSE:TITK),
and U.S. Concrete, Inc.
(NasdaqCM:USCR),

4. Recovery, FAST, and the Great Reshuffling
Why 2016 will mark the best year for U.S. focused M&A since the Great Recession
4
Public markets are also favoring CMI companies. FMI’s CMI index was up over 13 percent in 2015, while
the Dow Jones Index and S&P 500 were both negative for the year. This dynamic is also at work in the
trading multiples of FMI’s CMI index, which are at their post-recession high (Figure 5) of between 10 and
12 times EBITDA. With higher valuations, healthier balance sheets, and recovering earnings, the CMI
companies are primed and ready for additional deal activity.
Figure 3: CMI Companies’ Median Net Debt to EBITDA
In our recent experience, non-public companies are reporting similar earnings performance. 2015 will be
the best year of financial performance for many privately held firms since the onset of the recession. With
deal values driven primarily by recent earnings, a combination of strong buyer performance and strong
seller performance makes the likelihood of reaching agreement on purchase price substantially greater.
Figure 4: FMI’s CMI Index – 2015 Performance

5. Recovery, FAST, and the Great Reshuffling
Why 2016 will mark the best year for U.S. focused M&A since the Great Recession
5
The Long Awaited FAST Act
The FAST Act signed by the President in December is by no means an industry panacea. However, it
does include a slight increase over MAP-21 levels with $230 billion allotted to highways and $60 billion
allotted for public transportation projects through 2020. In the wake of numerous reauthorizations, the
legislation provides a window of certainty to the industry that it has not had since the passage of SAFTEA-
LU in 2005.
Figure 5: CMI Index EV / EBITDA (January 2008 – Present)
Figure 6: FAST Act Highway Funding Levels
Source: ASCE
This certainty also allows states to plan multi-year transportation projects. As a result, producers’
backlogs will extend in duration, providing greater insight into pricing decisions and future financial
performance. Barring a downturn in private markets, we anticipate financial performance will continue
to improve in tandem.
The FAST Act signed by the
President in December is by no
means an industry panacea.
However, it does include a
slight increase over MAP-21
levels with $230 billion allotted
to highways and $60 billion
allotted for public transportation
projects through 2020.

6. Recovery, FAST, and the Great Reshuffling
Why 2016 will mark the best year for U.S. focused M&A since the Great Recession
6
This has important implications for M&A activity. When buyers have greater confidence in future earnings
they are typically willing to pay higher prices for target companies as perceived risk is lower. Furthermore,
with a few years of reasonable earnings behind them, independent sellers are likely to achieve valuations
that have not existed in the market for quite some time.
The recovery from the 2009 recession has taken substantially longer than expected. Now more than seven
years after the failure of Lehman Brothers and the onset of the financial crisis, construction materials firms
are beginning to recover financially. When combined with a strategic reshuffling in the United States and
greater insight on future highway spending, we expect 2016 to mark the best year for U.S. focused M&A
since the onset of the Great Recession.
Date Target Acquirer Business Description
10/1/2015 Kelchner, Inc. Wood Group, PSN Construction
11/30/2015 Action Concrete Pump-
ing, AJ Concrete Pumping
LLC, and Kenyon Concrete
Pumping, Inc.
Brundage-Bone Concrete pumping
11/16/2015 Rose Paving Company Merit Capital Partners Asphalt and concrete main-
tenance
11/12/2015 Lane Industries, Inc. Salini Impregilo S.p.A. Construction, aggregates,
asphalt
10/28/2015 Heavy Materials, LLC and
Spartan Concrete Products,
LLC
U.S. Concrete Construction aggregates,
ready-mix concrete
Figure 7: Recent Announced Transactions
For more information please contact:
George Reddin is a managing director with FMI Capital Advisors, Inc., FMI Corporation’s Investment Banking
subsidiary. George may be reached at 919.785.9286 or via email at greddin@fminet.com.
Scott Duncan is a director with FMI Capital Advisors, Inc., FMI Corporation’s Investment Banking subsidiary. Scott
may be reached at 713.936.4930 or via email at sduncan@fminet.com.

7. About FMI
Founded in 1953 by Dr. Emol A. Fails, FMI is the leading management consulting, investment banking†
and people development
firm dedicated exclusively to the construction materials industry. FMI professionals serve all sectors of the industry and combine
more than 60-plus years of industry context and leading insights to achieve transformational outcomes for our clients. We
have subject matter experts in the following practice areas and serve clients throughout the U.S., Canada and internationally:
ƒƒ Strategy
ƒƒ Market Research
ƒƒ Business Development
ƒƒ Operations and Project Execution
ƒƒ Risk Management
ƒƒ Compensation
ƒƒ Peer Groups
ƒƒ Performance Management
ƒƒ M&A Representation
ƒƒ Valuations and Fairness Opinions
ƒƒ Private Capital Placement
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ƒƒ Organizational Leadership Development
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ƒƒ Executive Coaching
ƒƒ Succession Planning
ƒƒ Training and Talent Development
Management Consulting Investment Banking†
People Development
† Investment banking services provided by FMI Capital Advisors, Inc., a registered broker-dealer and wholly owned subsidiary of FMI.
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