Aggregate Industry Market Report IN THIS EXCLUSIVE ANALYSIS PREPARED FOR ROCK PRODUCTS, HEADWATERS MB LOOKS AT CURRENT MARKET TRENDS SUCH AS MERGERS AND ACQUISITIONS, AGGREGATE PRODUCTION AND PRICING. Public Valuations In Q2 2016, average valuation multiples for the publicly traded aggregates industry declined 2.3 percent and average EBITDA margins during the period increased from 18.9 percent to 19.3 percent compared to Q1 2016 (Figure 1, includes the constituents of Headwaters Aggregates Materials Index). Year over year, valuation multiples decreased by 8.4 percent while EBITDA margins widened to 19.3 percent from 17.2 percent. The publicly traded aggregates industry as a whole was trading at an average EBITDA multiple of 11.0x at the end of Q2 2016. However, the median multiple of 9.9x is the more relevant valuation metric for Q2 due to outlier multiples from Vulcan Materials and Martin Marietta of 18.7x and 16.2x respectively.

Source: FactSet

Aggregate Materials Index - Company Spotlight International and domestic aggregates providers experienced growth in revenue and margins in Q2 2016.

Buzzi Unicem is an Italian cement and aggregate producer with operations in central Europe, Russia, Algeria, Mexico and the U.S. In the first six months of 2016, the Company reported a 2.7 percent increase in cement sales and a 0.6 percent decline in ready-mix

concrete versus the same period in 2015. In December, 2015, Buzzi Unicem increased its stake in Mexican cement and ready mixed concrete producer, Corporacion Moctezuma, SAB de CV and in 2016 the company has been investing heavily in a new kiln line at its cement plant in Maryneal, Texas.

Cemex S.A.B de C.V manufactures and distributes cement, ready-mix concrete and aggregates in more than 50 countries. Cemex recently reported modest Q2 2016 sales declines in all geographic divisions except for the U.S. and Mexico (which posted 3.0

and 7.0 percent increases respectively) for an overall 1.0 percent drop in sales versus Q2 2015. Cost reduction initiatives and lower energy costs allowed the company to reduce its cost of sales and ultimately still post a 6.0 percent increase in Operating EBITDA. In Q2 2016, Cemex divested of assets in Thailand and Bangladesh to Siam City Public Co Ltd for $53 million. Additionally, on May 2, 2016, Cemex announced an agreement to sell its cement plant in Odessa, Texas, two cement terminals and the building materials business in El Paso, Texas and

Figure 1: Public Valuation Multiples

All $'s in Millions EBITDA

Company Name TEV Revenue EBITDA Margin Revenue EBITDA

LafargeHolcim Ltd. 48,279 28,953 7,323 25.3% 1.67x 6.6x

CRH Plc 32,526 29,924 3,250 10.9% 1.09x 10.0xCemex SAB de CV 25,584 13,730 2,610 19.0% 1.86x 9.8x

HeidelbergCement AG 21,827 14,865 2,466 16.6% 1.47x 8.9x

MDU Resources Group, Inc. 6,614 4,247 560 13.2% 1.56x 11.8x

Vulcan Materials Company 18,187 3,607 975 27.0% 5.04x 18.7x

Martin Marietta Materials, Inc. 14,011 3,693 863 23.4% 3.79x 16.2x

Buzzi Unicem S.p.A. 4,725 2,979 538 18.1% 1.59x 8.8x

Summit Materials, Inc. 2,582 1,547 306 19.8% 1.67x 8.4x

Eagle Materials Inc. 4,233 1,156 335 29.0% 3.66x 12.6x

Headwaters Incorporated 1,836 956 172 18.0% 1.92x 10.7x

U.S. Concrete, Inc. 1,249 1,079 129 11.9% 1.16x 9.7x

Mean 15,138 8,895 1,627 19.3% 2.2x 11.0x

Median 10,312 3,650 711 18.5% 1.7x 9.9x

*TEV = Total Enterprise Value (Market Capitalization + Net Debt)

Enterprise Value/

Las Cruces, New Mexico to Grupo Cementos de Chihuahua for $306 million as part of its plan to sell as much as $1.5 billion in assets by the end of 2017. Select Merger & Acquisition Activity Acquisition activity continued in Q2 2016 as aggregate producers acquired mineral reserves and completed strategic acquisitions to increase vertical integration and geographic expansion (Figure 2). Summit Materials, and U.S. Concrete were active consolidators during the quarter.

Private Equity Transaction Activity & Valuations GF Data Resources, a provider of detailed information on business transactions ranging in size from $10 million to $250 million, provides quarterly data from over 200 private equity firm contributors on the number of completed transactions. Figure 3 provides the number of completed transactions from GF Data contributors, the average EBITDA multiple and the average amount of debt utilized in the transaction computed as a multiple of EBITDA. The data, although not industry specific, does show valuations consistent with prior periods but the number of transactions were up from the prior quarter but still below the 67 transactions reported in Q4 2015.

Figure 3: Private Equity Valuations & Leverage

All Transactions Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016

# of Transactions 66 54 45 67 46 58

TEV/EBITDA 7.0x 6.3x 7.0x 6.6x 6.7x 6.8x

Total Debt/EBITDA 4.0x 3.9x 4.0x 3.9x 4.0x 3.8x

Senior Debt/EBITDA 3.3x 2.9x 3.1x 2.7x 2.7x 3.1x

Source: GF Data Resources

Figure 2: Recent Industry M&A Activity

Transaction

Date Target/Issuer Buyers/Investors

Transaction

Value ($mm)

06/27/2016 NYCON Supply Corp. U.S. Concrete, Inc. Undisclosed

06/24/2016 Hormigonera Equinoccial Equihormiguera

Cia Ltda.

Yura SA; Unión Cementera Nacional

CEM

7.5

06/24/2016 Four Rivers Mining Co. Ltd. Jamaica Aggregates Ltd. Undisclosed

06/07/2016 ArtGo Holdings Ltd. Maswin International (Hong Kong) Co.,

Ltd.

Undisclosed

06/01/2016 Technicrete Isg Pty Ltd. /Concrete Tile

Plant

Braas Monier Building Group SA 3.3

05/04/2016 Sierra Ready Mix LLC Summit Materials, Inc. Undisclosed

05/03/2016 Longley Concrete Ltd. /White Concrete

division

Naylor Concrete Products Ltd. Undisclosed

05/02/2016(Announced)

CEMEX SAB de CV/Cement Plant and 2

Cement Terminals

Grupo Cementos de Chihuahua 306.0

05/01/2016 Betomix Oy Lattia-Miredex Oy Undisclosed

04/13/2016 Lenstroidetal OAO /2 Concrete Plants Gruppa Kompanii Monolit LLC 3.0

04/01/2016 LBC Borås AB /Concrete Business Swerock AB Undisclosed

04/01/2016 Strickland Bridge, Inc. U.S. Concrete, Inc. Undisclosed

Source: FactSet

Aggregates Performance In 2016, publicly traded aggregates producers are outperforming the S&P 500 and the Dow Jones Industrial Average (DJIA) (Figure 4) with a 14.0 percent YTD return as of June 30, 2016. As seasonal construction picks up steam and construction activity as a whole continues to grow rapidly, the gap between aggregate producer returns and the general market have widened. This trend is expected to continue through 2016 given the current robust construction cycle underway. Vulcan Materials CEO, Tom Hill, pointed to two important factors in continuing this trend and delivering on projected results in Vulcan’s Q2 results press release: “(1) the ability of our customers to recover weather-delayed volume from the second quarter, which can be a challenge in a growing market, and (2) the absence of further delays in several large projects in key markets. And, as always, fourth quarter weather and the ultimate length of the construction season can impact our shipments in a given year.” Industry Spotlight

Construction Employment One of the most prevalent topics in the construction industry is the current shortage of qualified construction labor. NBC News recently found that there are approximately 200,000 unfilled construction jobs in the U.S. as reported by the National Association of Homebuilders and that the Department of Labor reported that the ratio of construction job openings to hirings is at its highest level since 2007.1 The Associated General Contractors of America monthly construction employment report for June reiterated these findings. Construction employment increased in 39 states between June 2015 and June 2016, although half the states shed construction jobs between May and June 2016. This shedding of jobs despite strong demand for construction labor is evidence of the significant decline in the availablity of experienced construction labor.2 Housing Starts At the end of July 2016, seasonally adjusted annual housing starts were 1.21 million, up 5.6 percent in relation to the same period in 2015.3 June 2016 numbers showed 1.19 million annual starts. The general consensus is that 1.5 million new homes are necessary on an annual basis to keep up with population growth and the replacement of old homes, given current homeownership rates of 62.9 percent, the lowest level since the Census Bureau began tracking homeownership rates in 1965.3 Housing starts will need to grow an additional 24.0 percent to reach sustainable levels and growth will drive land development and infrastructure expansion benefiting the aggregate industry.

1 NBC News: “Construction Worker Shortage Weighs on Hot Housing Market” 2 The Associated General Contractors of America 3 US. Bureau of the Census

80

90

100

110

120

130Figure 4: YTD Returns Comparison

Aggregate Materials Index S&P 500 Dow Jones Industrial Average

Source: FactSet

Construction Materials Construction material prices rose 1.1 percent in June, but have fallen 2.5 percent year-over-year, according to an Associated Builders and Contractors analysis of Bureau of Labor Statistics data. As has been the story in recent months, the monthly price gain was driven mainly by oil prices, which expanded 17.0 percent for the month but are still down 20.6 percent from a year ago. Additionally, seven other key materials prices rose on a monthly basis in June.

Unprocessed energy material prices increased 8.3 percent

Fabricated Structural Metal Product prices increased 0.7 percent

Prepared asphalt, roofing and siding product prices 0.6 percent

Steel mill product prices increased 0.2 percent

Concrete product prices grew by 0.2 percent

Several key materials prices declined in June including iron and steel, natural gas and nonferrous wire and cable. Aggregates Material Trends Industry results in Q2 2016 again showed quarterly increases in pricing and volume compared to the same period in 2015 for cement, crushed stone and sand & gravel. The decline in asphalt prices related primarily to instability in oil prices. Cement The estimated portland cement consumption (22.1 million metric tons) increased by 1.3 percent in Q2 2016 compared to Q2 2015.4 Ready-Mix Concrete Ready-mix concrete (RMC) prices continued to rise in Q2 as measured by the average RMC net selling prices of U.S. Concrete, Vulcan Materials, Martin Marietta and Eagle Materials during the quarter. Quarterly RMC volume data is not reported. Crushed Stone An estimated 377 million metric tons of crushed stone was produced and shipped for consumption in the U.S. in Q2 2016, an increase of 6.0 percent compared with the same period of 2015. The production of crushed stone increased in six of the nine geographic divisions and 25 of the 44 states that were estimated in Q2.4 Sand & Gravel The estimated U.S. output of construction sand and gravel produced and shipped for consumption in Q2 2016 was 269 million metric tons, an increase of 6.0 percent compared with the same period of 2015. The production of sand and gravel increased in five of the nine geographic divisions and 23 of the 45 states that were estimated in Q2.4

4 U.S. Geological Survey

Source: U.S. Geological Survey Sources: EAPA Asphalt in Figures, Vulcan Materials & Martin Marietta Materials average of net asphalt selling prices

Source: U.S. Geological Survey

Sources: U.S. Geological Survey, Average of Vulcan Materials, Martin Marietta and Eagle Materials average net selling price

Sources: NRMCA Industry Data Survey, Average RMC selling price of U.S. Concrete, Vulcan Materials, Martin Marietta Materials & Eagle Materials

37 39

$80

$86

$92

$98

$104

$110

0

15

30

45

60

75

90

Pri

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U.S. Cement Production

Cement Volume Cement Price

$85

$90

$95

$100

$105

$110

250

270

290

310

330

350

Pri

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U.S. Ready-Mix Concrete Production

Ready-Mix Concrete Volume Ready-Mix Concrete Price

No

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$44

$46

$48

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U.S. Asphalt Production

Asphalt Volume Asphalt Price

No

t re

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582 648

$9.0

$9.4

$9.8

$10.2

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600

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1,500

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U.S. Crushed Stone Production

Crushed Stone Volume Crushed Stone Price

411 443

$7.0

$7.2

$7.4

$7.6

$7.8

$8.0

0

200

400

600

800

1,000

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U.S. Sand & Gravel Production

Sand & Gravel Volume Sand and Gravel Price

Headwaters MB is an independent, middle-market investment banking firm providing strategic merger and acquisition, corporate finance, and merchant banking services through proprietary sources of capital. Named “Investment Bank of the Year” by The M&A Atlas Awards in 2015, Headwaters MB is headquartered in Denver, with six regional offices across the United States and partnerships with 18 firms covering 30 countries. For more information, visit www.headwatersmb.com. To discuss any information contained in this report, contact the Headwaters MB team: Darin Good, managing director, dgood@headwatersmb.com, 303-549-5674; Brian Krehbiel, vice president, bkrehbiel@headwatersmb.com, 303-531-5008.