1、Equity Research 7 August 2019 CORE Barclays Capital Inc.and/or one of its affiliates does and seeks to do business with companies covered in its research reports.As a result,investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.Inves
2、tors should consider this report as only a single factor in making their investment decision.This research report has been prepared in whole or in part by equity research analysts based outside the US who are not registered/qualified as research analysts with FINRA.PLEASE SEE ANALYST CERTIFICATION(S
3、)AND IMPORTANT DISCLOSURES BEGINNING ON PAGE 20.Restricted-Internal U.S.Homebuilding&Building Products Barclays Building&Building Products Conference-Management Question Pack We are hosting the Barclays Select Series:Building&Building Products Conference on Thursday,August 8th in New York City.Ahead
4、 of the conference,we are publishing our Management Question Pack with suggested questions on the key issues and topics for the management teams attending our conference,along with summaries of our financial models for those under our coverage.Please feel free to contact us to request any of our ful
5、l financial models.INDUSTRY UPDATE U.S.Homebuilding&Building Products NEUTRAL Unchanged U.S.Homebuilding&Building Products Matthew Bouley+1 212 526 9029 BCI,US Christina Chiu+1 212 526 1341 BCI,US Latin America Multi-Industry Benjamin M.Theurer+52 55 5241 3322 BBMX,Mexico Barclays|U.S.Homebuilding&B
6、uilding Products 7 August 2019 2 CONTENTS HOMEBUILDERS.3 PulteGroup(PHM,Equal Weight,$32 Price Target).3 BUILDING PRODUCTS.5 JELD-WEN Holding Inc.(JELD,Overweight,$24 Price Target).5 Skyline Champion(SKY,Overweight,$19 Price Target).7 CEMEX SAB de CV(CX,Overweight,$6 Price Target,Covered by Benjamin
7、 Theurer).9 BUILDING MATERIALS DISTRIBUTION.10 Builders FirstSource Inc.(BLDR,Equal Weight,$19 Price Target).10 BMC Stock Holdings(BMCH,Equal Weight,$23 Price Target).12 Foundation Building Materials(FBM,Overweight,$20 Price Target).14 GMS Inc.(GMS,Overweight,$26 Price Target).16 SiteOne Landscape S
8、upply(SITE,Equal Weight,$69 Price Target).18 Barclays|U.S.Homebuilding&Building Products 7 August 2019 3 HOMEBUILDERS PulteGroup(PHM,Equal Weight,$32 Price Target)Key Questions Do you view your current mix of product by controlled lots 35%first-time,34%active adult,30%move-up as an accurate reflecti
9、on of what PHM sees as optimal,or do you suspect these percentages will continue to shift towards first-time?Within your first-time exposure,could you break down the mix of higher-priced(relatively)first-time buyer product vs.true entry-level and lower price points?Are you anticipating any mix shift
10、s within these first-time categories?Can you elaborate on the magnitude of incentives that occurred in the different buyer segments as well as geographies earlier this year?How can we reconcile your commentary that incentives are largely persisting in the market vs.peers who may have seen a more pro
11、nounced curtailment of incentives?Is it simply geographies,buyer segment exposure,etc.?Have you been able to raise prices in first-time communities?Some of your competitors have discussed seeing pricing power at this buyer segment?What do you suspect drove the softer demand trends in your active adu
12、lt product in Q2?How do you think about optimal local market share?In which markets are you already there and where else are you most focused on meaningfully growing local share?Can you quantify the effect that lumber price tailwinds have had on margins in 19 thus far and the projected effect in the
13、 back half of the year?Why is PHM seemingly seeing less of a lumber tailwind than other homebuilders?Land Strategy Within your land strategy of optimizing asset efficiency and returns,how do you think about the optimal size of the land portfolio?How do you view balancing growth and improving returns
14、?What does your current lot position say about 2020 unit growth?At this point in the cycle,what is your optimal years supply of land?Where are land option deals most available?How should we think about the optimal mix of option lots longer term?Outside of options,are there any other deal structures
15、that you would consider utilizing more of like JVs and land banking?Margins How would you compare the labor environment to last year?Adjusting for product mix,are there any differences in your cycle times vs.last year?Or are you simply seeing less inflationary pressure in light of your updated guida
16、nce?What progress has PHM made on evaluating off-site manufacturing opportunities?What role do you think panelization or other manufactured components can have in alleviating some of the labor constraints builders face?As labor inflation continues to be an issue,how do you think about improving prod
17、uctivity at the job site?How much of an opportunity is this for PHM?Barclays|U.S.Homebuilding&Building Products 7 August 2019 4 Are you seeing any deflation in other input categories that will help offset this?Conversely,do the Chinese tariffs provide any quantifiable headwind?How do you view increm
18、ental investments in technology to improve the customer experience?Is this a way to drive growth or a way to reduce marketing spend?Capital Allocation How do you view the optimal capital allocation strategy beyond 2019?Is there any recent why share repurchase cant exceed$200 mn/year?How would you ch
19、aracterize the current level of deal flow for M&A within builders?Is PHM seeing more opportunities now vs.last year?What are the gaps in PHMs portfolio that might make sense to close through M&A?FIGURE 1 Summary Model Source:Company Data,Barclays Research Estimates Pulte20122013201420152016201720182
20、019E2020ETotal Revenue($mln)$4,820$5,680$5,822$5,982$7,668$8,573$10,188$9,940$10,462 Y/Y Chg.%17%18%3%3%28%12%19%(2%)5%Pre-tax Income($mln)$184$528$690$816$934$939$1,348$1,260$1,340 Pre-tax margin 3.8%9.3%11.8%13.6%12.2%11.0%13.2%12.7%12.8%EPS$0.54$6.76$1.25$1.37$1.75$1.44$3.55$3.40$3.67 Return on E
21、quity11.0%87.7%10.4%10.8%13.1%10.4%23.6%19.1%17.7%Tangible Book Value Per Share$5.24$11.76$12.54$13.22$13.74$13.67$16.74$19.48$22.57 HomebuildingHB Revenues($mln)$4,552$5,424$5,662$5,793$7,451$8,324$9,818$9,684$10,207 Y/Y Chg.%15%19%4%2%29%12%18%(1%)5%Gross Margin%19.4%24.0%26.7%26.9%25.0%23.6%23.9%
22、23.2%23.1%SG&A%14.8%13.7%13.7%14.8%13.4%11.5%10.7%10.9%10.7%Unit MetricsOrders(units)16,030 17,080 16,652 18,008 20,326 22,626 22,833 23,796 24,510 Y/Y Chg.%5%7%(3%)8%13%11%1%4%3%Community Count670 577 598 620 726 790 815 831 840 Y/Y Chg.%(4%)(14%)4%4%17%9%3%2%1%Sales Per Community22.1 27.1 28.3 29.
23、3 29.2 29.0 27.4 27.8 28.4 Y/Y Chg.%13%23%4%3%(0%)(1%)(6%)2%2%Deliveries(units)16,505 17,766 17,196 17,127 19,951 21,052 23,107 22,672 24,137 Y/Y Chg.%8%8%(3%)(0%)16%6%10%(2%)6%Deliveries-Average Selling Price($000s)$276$305$329$338$373$395$425$427$423 Balance Sheet/Cash FlowNet-debt to Capital 34%9
24、%10%22%34%40%28%15%4%Total Lot Count120,415 123,000 131,000 138,000 143,258 141,409 149,577 142,225 140,557 Years Supply of Land(LTM)7.3x 6.9x 7.6x 8.1x 7.2x 6.7x 6.5x 6.3x 5.8x Cash Flow from Operations($mln)$760$881$309($348)$68$663$1,450$1,552$1,075 Barclays|U.S.Homebuilding&Building Products 7 A
25、ugust 2019 5 BUILDING PRODUCTS JELD-WEN Holding Inc.(JELD,Overweight,$24 Price Target)*Note:JELD-WEN reports 2Q19 earnings on August 7th Key Questions With housing sentiment recovering,how do you think that could impact your volume projections for North America going into the back half of the year?H
26、ave you begun to see any progress around your global footprint consolidation?Do you expect any potential impacts to customer service levels amidst this consolidation?How should the margin savings phase in over 2H19,2020,and 2021?Has freight inflation softened in 2019 or even become a tailwind?How mu
27、ch further opportunity do you see to raise door prices in North America?How have the price increases in Europe trended thus far?What are you seeing with home center door inventories?How has that customer segment trended and whats in your expectations going forward?When do you suspect that channel mi
28、x in North America should normalize,in terms of stronger trends at distribution?How has the new construction environment YTD impacted inventory positioning at distribution?What are you seeing in non-residential construction markets?Given recent choppy datapoints,what are you hearing from customers o
29、n the non-resi side?Youve mentioned that your guidance numbers reflect the 25%tariff impact.What specific areas of your supply chain have been most affected by the 25%tariff impact?Are there any additional impacts from potential List 4 tariffs?How are you managing this from a supply side?Have you be
30、en able to pass on pricing?Do you have an update on efforts to regain share in North American windows?How should we think about M&A vs.share repurchase going forward?North America How do you expect price vs.raw material cost to evolve this year?How do you expect to manage inflation in steel,vinyl,wo
31、od etc?Do you expect to have any tailwinds from lower freight costs?How are labor costs evolving?Given the margin pressure from the windows segment in the last year,how are you managing volume growth in windows to alleviate the margin pressure?Will investment in price be necessary to regain lost win
32、dows share?How does the pipeline of new products look in N.A.?Are there any major upcoming product launches?Europe What are you hearing from customers in light of broader macro concerns across Europe?How has your business in Europe shifted in terms of geographies and mix?How have the Europe price in
33、creases implemented in April affected your positioning?Barclays|U.S.Homebuilding&Building Products 7 August 2019 6 How is the volume recovery tracking in light of the service level issues that have impacted volumes for several quarters?Australasia Can you discuss your strategy in the segment regardi
34、ng productivity and modernization initiatives?How do you expect margins in this geography vs.North America and Europe?FIGURE 2 Summary Model Note:Model Does Not Reflect 2Q19 Earnings Results(Scheduled for 8/7/2019)Source:Company Data,Barclays Research Estimates JELD-WEN20152016201720182019E2020ETota
35、l Revenues($mln)$3,381$3,667$3,764$4,347$4,447$4,510%growth(3.6%)8.5%2.6%15.5%2.3%1.4%organic growth3.3%3.2%0.1%0.5%1.0%1.3%Operating Income($mln)$132$215$263$190$338$392 Op.Margin%3.9%5.9%7.0%4.4%7.6%8.7%Incremental Op.Margin%(57.1%)28.9%49.3%(12.5%)148.0%85.4%Adjusted EBITDA($mln)$311$394$437$465$
36、490$525 Adjusted EBITDA Margin%9.2%10.7%11.6%10.7%11.0%11.6%Adjusted Diluted EPS$1.03$1.34$1.49$1.57$1.91$2.56 Balance Sheet&Cash FlowFree Cash Flow($mln)$97$128$206$122$130$181 FCF/Adj.EBITDA31.3%32.4%47.1%26.3%26.5%34.4%Net Debt($mln|Including Pension)$1,253$1,643$1,134$1,468$1,452$1,347 Net Debt/
37、Adj.EBITDA4.0 x4.2x2.6x3.2x3.0 x2.6xROIC5.5%7.4%8.2%5.1%8.5%9.2%SegmentsNorth America-External Sales($mln)$2,016$2,149$2,158$2,461$2,629$2,681%growth1.3%6.6%0.4%14.0%6.8%2.0%North America Adj.EBITDA($mln)202 252 274 279 314 340%margin10.0%11.7%12.7%11.3%12.0%12.7%Europe-External Sales($mln)$996$1,00
38、9$1,043$1,216$1,189$1,198%growth(10.1%)1.3%3.4%16.6%(2.2%)0.8%Europe Adj.EBITDA($mln)100 123 133 129 123 132%margin10.0%12.2%12.8%10.6%10.4%11.0%Australasia-External Sales($mln)$369$509$563$670$629$631%growth(9.7%)37.8%10.6%19.0%(6.1%)0.3%Australasia Adj.EBITDA($mln)40 60 75 91 86 90%margin11.0%11.7
39、%13.2%13.6%13.7%14.3%Barclays|U.S.Homebuilding&Building Products 7 August 2019 7 Skyline Champion(SKY,Overweight,$19 Price Target)Key Questions What is your targeted mix between modular homes,park models,and manufactured homes,as youve recently expanded the mix of park and modular?Do you find that i
40、ndustry demand is greater with park models or modular homes vs.HUD today?How does the margin profile compare across categories?Can you provide more detail into retail destocking trends that have persisted into Q2?How much longer do you expect this to persist?If the GSE programs that offer site-built
41、 financing for factory-built homes,MH Advantage and ChoiceHome,gain traction,how do you anticipate the landscape evolving?To what degree could SKY offer products for the builder-developer channel as a result?Have you begun to see any impact from the GSEs purchasing of chattel loans?When should we lo
42、ok to see lenders enter the space?What metrics are you targeting with implementing automation at the Leesville,Louisiana plant?What benchmarks are you looking at in terms of rollout at other facilities?How do you think about longer-term target of 10%EBITDA margins?What would be the sustainable mix o
43、f gross margin and SG&A?Do you have a time frame for this target?Do you see any bigger picture opportunities related to automation or expanding lean initiatives that could impact results in the medium-term?Demand and Revenue Outlook How are your plant capacity utilization rates tracking?Which market
44、s are seeing stronger utilization and which are still softer?What demand trends are you seeing in each of your channels independents,company-owned stores and communities?How does your six-week backlog look across different geographies?What does that length of backlog imply about demand trends into c
45、alendar 2H?How do you think about potential for greenfield expansions?Would any markets support this?What is your updated outlook for HUD shipments for the balance of 2019?To your knowledge,are there any additional regulatory processes in the works?Are you in conversations with regulators regarding
46、affordable housing solutions?Are you taking any initiatives to gain share in the market?At what point do you expect Canada orders to improve?What do you think was the main cause of the slowdown in certain regions?Margins Can you quantify how some of your operational initiatives(i.e.SKU rationalizati
47、on and standardization,value engineering,standardizing engineering and design platform)are tracking?What do you expect to be the target effect on margins?Are you able to anticipate when these initiatives might wrap up?Barclays|U.S.Homebuilding&Building Products 7 August 2019 8 On the labor side,are
48、you taking any initiatives to lower the cost structure?How are those tracking?How should we think about your guidance for near-term price softening as retailers re-stock?Do you have any plans to enact price increases in the year?What should we be aware of regarding expenses for the two facilities ra
49、mping?Would you face any potential Chinese tariff impacts?What are you doing to mitigate?Capital Deployment&Balance Sheet Do you have any intentions of expansion through M&A,noting your net cash position?Would you consider levering up at any point or do you prefer to maintain the net cash position?F
50、IGURE 3 Summary Model Source:Company Data,Barclays Research Skyline ChampionFY16FY17FY18FY19FY20EFY21EPeriod Ending:Mar-16Mar-17Mar-18Mar-19Mar-20Mar-21Total Revenues($mln)$752$861$1,065$1,360$1,412$1,508%growth14.6%23.6%27.7%3.9%6.8%Adj.EBIT($mln)$24$45$62$89$101$114 Adj.EBIT Margin%3.2%5.2%5.9%6.5
