Ladies and gentlemen, welcome to the Saint-Gobain conference call. I now hand over to Mr. Benoit Bazin, CEO, Mr. Sreedhar, CFO, and Mark Rayfield, CEO of North America. Gentlemen, please go ahead.
Thank you. Hello, and welcome to our analyst and investor call on the acquisition of Kaycan. Thank you again for joining on such a short notice. You have the presentation on the website, so we'll go slide by slide. I'm extremely happy to announce this acquisition. I have with me Sreedhar, our CFO, and Mark Rayfield, our CEO for North America. Today is a decisive step for Saint-Gobain to reinforce our leadership position in North America and in light and sustainable construction. This acquisition of Kaycan has been managed as a bilateral discussion with the family that owns the business. Without option, but bilateral, according to the relationship that has been built over the time between both teams. I now go to slide number two. Kaycan is indeed a compelling strategic acquisition. The strategic rationale is very strong.
This is fully in line with our vision to be the leader in light and sustainable construction, and the plan Grow & Impact that we presented to you last October during our Capital Markets Day. In terms of geography, Kaycan will allow us to increase our presence in North America. Also, the priority highlighted during our Capital Markets Day. Since North America, you have seen it, has been and is for us a growing and profitable region. Thanks to this move, we will specifically gain a leading position, a number one position in siding in Canada, which is also a highly attractive market and country for us. You know, the new country-based organization that we have developed over the last three years. Canada is part of our top 15 countries and a successful organization over there.
Kaycan will allow us to broaden our light and sustainable construction offer in this country. In terms of solutions, Kaycan will enrich our offer for exterior facade solutions overall in North America, not only in vinyl siding that we have already in the U.S., but not in Canada. Also complementary solutions, including notably aluminum and engineered wood siding. All this will be for the great benefit of Saint-Gobain customers. It is truly a growth-driven acquisition which will bring a positive impact to our customers and will create high value for Saint-Gobain shareholders. I turn now to slide number three. This is totally in line with our vision, be the worldwide leader in light and sustainable construction, bringing two big attributes to our customers, sustainability and performance. Together, Saint-Gobain and Kaycan will be a leader in exterior siding, both in the U.S. and in Canada.
We'll be able to offer an extremely broad portfolio of solutions for building facades. I'm now on slide number four. Remember the slide? This is the slide we shared with you at the time of our Capital Markets Day last October. This is the exact same strategic rationale. First, North America is a fast-growing market with deep structural housing needs. 3.8 million housing unit deficit in the U.S., 1.8 million housing deficit in Canada alone. This growth is supported by robust demography, new building usage, low construction in the past decade. In Canada alone, population growth is driven by a strong immigration. In 2021, more than 400,000 people immigrated to Canada for a total population of 38 million inhabitants.
On top of that, I would say Canadian economy is doing well when you think of the commodity prices, whether it's for mining, agriculture, oil, all these bodes well for Canada going forward. Second, North America market is also facing labor shortages, which means the easiness to install, the time saving for the installers, the solutions that we can provide to them are needed more than ever. The structural housing deficit, labor shortage, all that are strong drivers to further increase the penetration of light construction, which already represents 45% of construction products spent in North America. For all these reasons, North America is clearly a key growth and highly profitable market for our solutions on light and sustainable construction. I now turn to you, Mark, on slide number five.
Thank you, Benoit, and good afternoon, good evening. As Benoit said, this acquisition builds on the strong foundation of success in North America, driven by our exceptionally qualified and focused teams. This foundation was demonstrated and strengthened with the successful integration of Continental Building Products, which created value in two years and really strengthened our light and sustainable construction offer. As you know, CertainTeed is the only North American manufacturer that offers such a wide breadth of solutions for both residential and commercial, covering both exteriors and interiors. The strength of the offer and of the teams can be demonstrated by the strong results, both in top line and margin enhancement in the past years, with sales of approximately $6 billion in 2021, 19% EBITDA margin, and 12% compounded annual growth.
This offer and this strength will only be further strengthened with the addition of Kaycan, as well as the addition of GCP after regulatory approval to the portfolio. Another important point is that CertainTeed is the preferred brand of exterior solutions for the North American contractors and homeowners, and these are the decision-makers in exterior solutions. To slide six, please. Siding inside the exterior solutions portfolio is a key component to residential light construction. The market is made of many materials, wood, metal, vinyl, engineered wood, but vinyl being the largest segment. In the vinyl segment, we are the number two player in the U.S. with over $600 million in sales. We are, as mentioned before, the leading brand with the decision-makers in exterior solutions.
We are the one with the broadest offering enabled to cross-sell between roofing and siding in each territory, which is why the expansion of range that Kaycan offers is so exciting. Our focus on operational excellence, customer centricity, and supply security has allowed us to grow at nearly 2x the market in the past three years with a 14% compounded annual growth. In short, we're gaining traction in an attractive and important market in North America through the portfolio and the skills and the strengths of our teams. Slide seven. In Canada, we are already the undisputed leader in light and sustainable solutions. The strength of our teams in Canada has delivered a very strong track record as well on growth with sales of CAD 750 million and 17.6% EBITDA margin.
It is supported with extremely deep partnerships with leading distribution channels as well as key contractors. You see the list here of Lowe's, TIMBER MART, RONA, Home Depot, and Home Hardware. We also have the leading position in wallboard and interior solutions, which allows this strong position with in interior solutions in gypsum, insulation, ceilings, which offers us a full portfolio coast to coast for our customers in Canada. We are smaller in Canada, as mentioned by Benoit, in exterior solutions, which is why this addition is so exciting. Slide eight. Kaycan is the perfect fit for this business. I'd like to say at the start, I've had the pleasure in the past month plus to travel with Lionel, Andrew, Philip, and Tammy and see many of the sites and employees of Kaycan in the past month.
I've been so impressed not only with their business, which we've talked about and we'll talk more about, but the culture and the people and the incredible innovation and customer centricity that they have within the business. The more we got to know the family and the business, the more impressed Joe Bondi, who runs our siding products business, and I were with the teams in the company. Just wanted to make sure before I got into the details, I was very clear on how exciting this company is and how excited we are about this company. They are the leader in siding in Canada, where we presently do not have a meaningful position. They bring a more diversified offering, as Benoit shared, with a deep offering in growth categories of metal and engineered wood, where we do not have a position in North America.
With 12 manufacturing plants, they have unrivaled coverage and service across North America, and they too rely on extremely strong connection with contractors, builders, and big box retail, which is all critical in their long-term growth that they've shown in the past. Slide nine. These strengths that I mentioned, that are critical legs to their growth history, can be seen here in this slide, where you see compounded annual revenue growth of 11% between 2018 and 2021-2022, and EBITDA growth of 23% compounded over that same period of time. Again, a very strong company with extremely strong legs of growth, of which has demonstrated strong top line and bottom line growth. Slide 10. With the addition to Kaycan, we bring the leadership position in siding and a broad portfolio of other exterior solutions.
It's the perfect fit of the business, as I mentioned before. They're the leader in siding, where we don't have a meaningful position. They bring the diversified offering of aluminum and engineered wood. They have the broad access to distributors and the broad manufacturing portfolio. I think when you take a look at the charts on the right, they say more than I could, showing clearly the impact this acquisition has on the mix in Canada to bring a solid foundation of exterior solutions and complement our leadership position in internal solutions. Give you a much more balanced portfolio, allowing us to grow even more solution-based sales in the Canadian market. Slide 11. I'm sorry. Kaycan has a tailored approach in Canada that allows it to grow and maximize its reach.
This is both through an integrated as well as retail distribution and fully aligns the channels to market for these products in Canada. This leading manufacturer and distribution network maintains close contact with contractors and homeowners. As you'll note on the bottom of the slide, the top four players in the Canadian market are also vertically integrated, as this is the way to market for these products, but Kaycan is by far the strong leader. In the U.S., Kaycan has a fantastic distribution network for their products. However, this integrated distribution is only a small fraction of the sales, with a much larger presence in one-step, two-step, and retail channels, meaning they primarily sell through one-step and retail distribution in the U.S.
Although it's a great and successful business, it's a small player in the U.S. market, with $70 million in sales and $10 million in EBITDA. The U.S. entity is completely separate as an entity and will be divested in the near term upon closure of this deal. Slide 12. From a product mix and a market solution standpoint, I think this chart also shows you really how strong this portfolio is when it all comes together. It allows us to really build solutions-based exterior cladding solutions.
A combination of GCP when the acquisition is approved, as well as Kaycan, gives you a full system in roofing with roof membranes and roofing products and shingles, waterproofing and air vapor membranes for the siding, along with vinyl siding, shakes, and stone from CertainTeed, and then wood, aluminum, and rainwear from Kaycan, giving you a complete offer for both residential and light commercial opportunities. Next slide 13. I'm also very, very excited on how this expansion advances our sustainability position in the region. Kaycan has a very exciting program called R3V, reclaim, regrind, and repurpose. The program closes the loop by recycling vinyl siding from their branches back into the product going forward, has a take-back program for post-consumer waste across the distribution network.
They also use 100% of the waste generated in the production line for vinyl and aluminum, reuse it within the product, making sure 100% is reused, and all of their building products are sustainably engineered to contribute to green building certification programs that can and obtain LEED points. In short, they're very sustainable products with a common culture of minimizing our footprint while I maximize our growth. In conclusion, this is why I'm personally confident that together with the Kaycan sales teams, we can deliver strong synergies that Sreedhar will describe to you in a minute, both in an operational efficiency perspective in our combined business as well as enriched teams of expertise. In terms of cross-selling opportunities, whether in the U.S. or Canada, and make sure that we're using the best routes to market in a large product lines.
I'm truly excited about bringing these benefits together in terms of service and products. I know that it will create a lot of opportunities for both the Kaycan teams and the CertainTeed teams with such a great platform to offer and great knowledge in the teams. As I mentioned before, the teams I have met, the leadership I've met in the recent weeks are so impressive, and it's so important that they're very aligned with our values, our culture, and our innovation spirit, and the growth ambition that we have across globally, the Saint-Gobain business. I now would like to hand over to Sreedhar to tell you some more details on the deal.
Thank you, Mark. Good evening, everybody. This transaction is clearly a value creative, supported by synergies of which the vast majority are cost synergies. From the total synergy of $30 million, the cost synergies are around $23 million, and $7 million is the synergy coming from the revenue synergy. These amounts are expected to be secured in year three. Cost synergies, which represent nearly 80% of the total synergies, are expected to be captured through SG&A reduction, through rationalization of commercial and back-office functions, and reduction of Kaycan corporate costs. Maximizing efficiencies, leveraging Saint-Gobain's world-class manufacturing program, which is very successful, and also have looked for logistics optimization. We have purchasing savings through economies of scale in alignment of key imports and indirect spend. These cost synergies are clearly identified, and we are highly confident that we will be able to secure them very quickly.
In addition, we have also taken into account only low-hanging sale synergies with an impact on EBITDA of around $7 million. Then a large part of these synergies are coming from cross-selling between CertainTeed and Kaycan. In short, these synergies are clearly identified and achievable. Now, slide number 15. With the Kaycan acquisition, we are continuing on a very successful growth and profitable path in North America, in line with the two significant acquisitions made in recent years. Continental Building Products, which has been highly value-creating, as Mark outlined already. You know that we created value within the second year, and more recently now, we have announced the acquisition of GCP, where the acquisition is in progress.
Starting from $6.5 billion in 2018, we expect to reach more than $10 billion of sales on a pro forma basis in 2022. Coming both from the very strong organic growth and then three major acquisitions. Profitability more than double in the same time frame. As you can see, with the EBITDA growing from less than $900 million to around $2 billion. Now slide number 16. Let's move to the transaction overview. Our offer price implies an enterprise value of $928 million, representing 11.2x the EBITDA multiple for the fiscal year 2021, ending at the end of July 2022. The net enterprise value, post U.S. distribution divestiture, assuming similar pre-synergy multiple, will be approximately $820 million. The post synergies multiple will be around 8x.
The transaction value will be clearly value-creating by year three. The transaction will be fully financed in cash and will have a very limited impact on our leverage ratio. In terms of the transaction process, the family ownership has approved transaction and will aid the transition. Closing of this transaction is subject to antitrust approvals and satisfaction of other customary closing conditions. It is expected to close by year end 2022. Now I will hand the floor back to Benoit to make the concluding remarks.
Thank you, Sreedhar. Thank you, Mark. As you have seen, this move is a very important step for Saint-Gobain. We are clearly establishing a leading position in siding Canada, and at the same time reinforcing our position in exterior solutions in the U.S. We will strengthen Saint-Gobain presence overall on the growing North American market. You have seen the journey over the last three years. North America will be not far from 20% of our total sales on a pro forma basis by the end of 2022. Clearly, a growing path also of a leader in light and sustainable construction. It will enhance our solutions portfolio, notably into engineered wood, aluminum siding. I'm very confident that this growth-driven acquisition will certainly create high value for both our shareholders and our customers. I'm extremely fortunate and proud to have a solid leadership team by my side.
Mark and his team are committed to the flawless execution of integrating Kaycan in Saint-Gobain and value creation, as they have been already very successful with Continental. Finally, I'm extremely enthusiastic and eager to warmly welcome all Kaycan teams within Saint-Gobain in some months, and to provide very attractive development opportunities for both Kaycan and Saint-Gobain teams going forward. Thank you for your time. We are now happy, Mark, Sreedhar, and myself, to take any of your questions.
Ladies and gentlemen, if you wish to ask a question, please press zero one on your telephone keypad. The first question comes from Yves Bromehead from Exane BNP Paribas. Sir, please go ahead.
Good evening, everyone. Thank you for taking my questions. I'll have three. Number one, I just wanted to come back as this is a vinyl siding acquisition. Just looking a bit at the market share of the exterior wall in the U.S., vinyl siding has been actually losing share to substitute materials like fiber cement and stucco in the U.S. at least. Could you maybe give us the view as to maybe what you have seen in Canada? Is there anything different here? Do you think you can actually reverse the curve with this acquisition? My second question is, can you specify what's the split between the new build exposure to new housing and RMI for this business? Maybe what is your view?
I mean, you do talk about the undersupply in the U.S., but the recent leading indicators are weakening. In terms of timing of the deal, you know, what's your view there? Do you think there's a bit of a risk that there's a pullback or even a recession in the U.S.? Finally, maybe for Sreedhar, can you specify what are the full implementation costs of the synergies? Thank you.
Thank you, Yves. I will maybe highlight some comments on question number three, and then I will give the floor to Mark on question number one and number two. Frankly, Yves, you know, we shared end of April on our Q1 dynamic, what we see on the ground in North America, and I can tell you, we see no change. It is a robust market. We are still mostly on allocation for most of our product lines. We are still battling, and I think doing a fine job on overcoming the supply chain disruption, which may have caused a bit of delay in some of the job sites. We have seen the statistics. They are strong in the U.S. The under-built, I mentioned it, so it bodes well going forward. Same in Canada. You know, Canada has a growing population, I mentioned that.
1.8 million under-built in the last 10 years. I happened to be in Davos early last week and sitting next to the former head, governor of the Bank of Canada. When you talk to him, when you think of the oil price, the commodity prices on agriculture, on mining, he was super positive about the Canadian economy going forward on top of the strong housing momentum. I can tell you that no change on the dynamic we see in North America, whether it's on volume and pricing. We have already announced some additional pricing actions for beginning of July in several product lines, whether it's roofing, gypsum, and so on. That's what I will mention. Mark, I turn back to you on the siding.
Maybe if you could highlight our market share on vinyl in the U.S. plus the other product lines.
Yes, I'd be happy to. It's a great question. I mean, first off, siding is a very diverse marketplace, I agree with that comment. Vinyl siding is still the number one siding in terms of share within the vinyl siding category, making just about 1/3 of the siding category going forward. Other sidings that we are acquiring with this being engineered wood and metal are broadening our portfolio. We also have stone in our portfolio. Vinyl is still and will remain probably the largest segment of siding, we believe it's an important place to have leadership position as well as expanding the portfolio going further out. I think as we showed earlier, our growth rate within the siding market is 2x the rate of the market.
Our diversity of products and our quality of our teams and our products, as well as the alignment between our exterior product selling team, means we're gaining share in that category going forward as well. I believe the second question was residential versus multifamily. Kaycan is about 40% new construction, 60% renovation. Again, renovation being the more resilient of the markets through the cycles.
In terms of implementation cost is very limited. The synergy, what I have announced, $30 million, is basically the net of that, so it's already included. It's very, very limited.
Oh, okay. Great. Thank you so much for all those answers. Thanks.
Thank you. Next question from Elodie Rall from JP Morgan. Madam, please go ahead.
Hi, good evening. Thanks for taking my questions. I'll have three as well. First of all, just, like, in terms of the capacity of the group to absorb this acquisition, how do you view this in terms of stretching management bandwidth with regard to GCP that still has to close and now this that will close, like, broadly at the same time? Is this something you are comfortable doing it like all together, knowing that GCP is still coming? Second, why this specific market, and why not strengthening actually on the construction chemicals side, especially with GCP, but also with, you know, we know that some admixture businesses might be for sale as well in the U.S.
Lastly, why would you divest the U.S. distribution side and keep the Canadian distribution? Thanks.
Yeah. Thank you, Elodie. I'll take those different questions. First, I'm not worried at all about our capacity to integrate. Continental is done. Continental was done between Jay Bachmann, former CEO of Continental, and Mark Rayfield. Second, on GCP, keep in mind that there will be a small portion of GCP, the waterproofing business, which goes hand in hand with our roofing business, which will go under the North American region and the leadership from Mark with one head managing roofing. That will be an easy integration, waterproofing, totally linked to our roofing regional business in North America. The rest of GCP will be integrated by Thierry Bernard, the CEO of Chryso. This is Thierry, David Molho, the Head of High Performance Solutions, who are working on that. They have weekly, if not more calls to prepare the integration. It's moving well on GCP.
We have made good progress on the different antitrust reviews. We still expect that to arrive in our books in the second half of 2022. No worry. You are right. It's an important question and something that I pay super high attention to. I'm extremely comfortable with the team that we have in North America. Joe Bondi is the Manager of Siding that Mark Rayfield highlighted, a very seasoned manager that has been around Saint-Gobain for many, many years, very successful on siding, and the leadership of Mark, which has already proven a lot, notably with Continental. Second, construction chemicals. Yes, we want to continue to grow construction chemicals admixtures. We are actually working on some smaller deals that will complement Chryso and GCP.
We have to close GCP, so we are not going to make a significant move that could complexify the antitrust regulatory approval regarding GCP. We have made good progress in Europe. We are making very good progress in North America. We are also finalizing in the review of the U.K., but we are not going to make a significant move that could complexify or delay the closing of GCP. Notably in the U.S., based on the market share that GCP has on admixtures, we cannot be the buyer of MBCC if Sika has to resell MBCC in the U.S. That's not something we can even look at for antitrust reasons. We are not giving up on an opportunity like that because of this additional acquisition in North America.
Finally, on U.S. distribution, it's a very minor portion, and as Mark highlighted, Canada is a special market where Kaycan has a number one position, and Canada as a market is used to a kind of integrated distribution with a very large presence. They have 30, if not more, locations across all Canada, and we are going to leverage those distribution locations to actually sell more of Saint-Gobain Canadian products. In the U.S., when you have only 20 locations across all the U.S., you don't have any critical size. We prefer to go, and this is also a good portion of the existing sales of Kaycan in the U.S., that go to what we call the one-step distributor, the big distributor of Saint-Gobain. They are, by the way, the largest customers of Saint-Gobain worldwide.
We know them extremely well, and we are confident that it will be a smooth partnership digesting this small U.S. distribution business into our existing distribution partners in the U.S. specifically. Two sets of pictures between Canada and the U.S.
I think it just reinforces that the approach we have taken is by country, because you need to look at the strengths of each country, and then based on the strengths, you decide to keep or not keep any portfolio. It's not just distribution. Anything for that matter is what Saint-Gobain has been doing for the last three years.
Okay, thanks very much.
Thank you. Next question from Arnaud Lehmann from Bank of America. Sir, please go ahead.
Thank you very much. Good evening, gentlemen. Three quick questions on my side, please. Firstly, I think you gave the split between new construction and renovation. Would you mind giving an idea between residential and non-residential exposure for Kaycan, please? Secondly, have you already identified a potential buyer for the U.S. distribution business of Kaycan? You sound pretty confident that you can sell it at similar multiples to your acquisition price. Lastly, could you give us an indication of the performance of Kaycan in the last couple of years? You give some useful data relative to 2017, 2018, but I guess I'm interested to see if Kaycan had enough pricing power in the last 12-18 months to cover cost inflation. Thank you.
I think, Mark, most of those questions are for you.
Yep.
On the residential, non-residential.
Yep, I can address those. I mean, on residential and non-residential, we don't have strong visibility to the breakdown of residential, non-residential. From what we know of the products and from our tours and business meetings, we believe it's more residential and multifamily residential and smaller in the commercial light construction side of it.
kind of 90/10 type of ratio between residential and non-residential. When it's non-residential, I know it's light non-residential.
Right.
You know, small restaurants, small things a lot, not super high commercial buildings.
On the second item, I think, you know, what I mentioned earlier, it's a very good building distribution business. The fact that, you know, it's small and doesn't have the scale that we think is appropriate in the U.S. doesn't mean it's not a great business. There's been lots of acquisitive activity with distribution in the U.S., so we feel very confident. We're announcing that we have a partner for that. We're very confident that the asset will be very appealing in the marketplace and we're very confident of closing that. From offsetting inflation, they've done a very good job of getting better pricing than cost factors, and we've seen improvement in the results from when we started this process to where we are now. We see that trend continuing.
Thank you very much.
You know, Arnaud, taking back a bit of history, remember some of the decisions we took on our overall businesses in the U.S. when we bought, years ago, Norandex. We have kept siding of Norandex, and we grew it very nicely with CertainTeed as a second brand and a profitable brand, and we sold the Norandex distribution arm. This is the kind of operation that Mark has been able to execute, and we feel very confident with the intimate partnership we have with some big names in the U.S. to do that on a smooth way.
You just have to keep in mind it is very small, so it's not gonna make any difference to the overall multiple of the transaction.
Right. You're not changing your strategy on distribution in North America, I guess, was the broader question, considering, as you said, you sold Norandex a few years back.
No, we don't change it. In Canada, it makes a lot of sense. As Sreedhar said, you know, we are super pragmatic country by country on how we develop our routes to market. In Canada, it makes sense to have distribution. We have a strong foothold across all Canada, and this is a tool, a route to market that we are going to leverage, and the Canadian market is very much used to that, as highlighted by Mark in one of the slides. U.S. is different, so we are taking a pragmatic approach in the U.S. It's small, and we sell it. In Canada, it's strong. This is the way the market is organized.
This is on slide number 11, and it makes full sense for us to use it, leverage it, and for instance, sell very quickly through Kaycan distribution outlets, the roofing products of CertainTeed, which they don't have today. That will be part of the growth development.
Very clear. Thank you very much.
Thank you. Next question from Tobias Woerner from Stifel. Please go ahead.
Yes, good evening. Thanks for taking my question. Three if I may. Number one, the transaction, was it a process, i.e. an auction or was it a one-on-one situation? You alluded quickly to the fact that you've known the company for a long time. The second question relates to slide 10, which I find quite intriguing and as far as you show before after, and you show the revenues relating to Kaycan, which seems to point to some good potential here, i.e. the revenue per plant seems to be much lower and the employees per plant also seems to be much higher. Maybe you can give us some sense there.
Just lastly for Sreedhar, if I may, the depreciation, the D&A as a percentage of sales for Kaycan itself and maybe also for the wider North American business, once you achieve, you know, all these or close all these acquisitions. Thank you.
Thank you, Tobias. I will answer the first, Sreedhar, the third, and Mark, you will take the second one because you have toured a lot of those facilities. As I mentioned in the introduction, it has not been an auction. It is a bilateral one-to-one discussion that we have had and that our teams in Canada and in the U.S. under the leadership of Mark had over the last four, five months. Clearly, they sold to CertainTeed Saint-Gobain because of the value that we share, the customer approach, the innovation, the brand, the image of Saint-Gobain. Mark has been highly involved in the discussion. I talked to the owner of this business, which was created in 1974, and he told me again, "I would never have sold this business to any other player.
I was approached 50 x by private equity competitors. I did choose Saint-Gobain CertainTeed." I think it's, I say that because Mark will be too humble to say it, but it's a big tribute to our teams in North America, how attractive we have been also for teams like Continental, you know, competitors, customers, distributors, they watch us, what we have done with Continental Building Products, what we have moved also, making this acquisition on Grace. All this, I think, is a strong pillar to build upon. I'm happy that, you know, it's the second big move in one year, like Chryso. It was a one-to-one discussion for myself and Thierry Bernard on the private equity.
I think those deals are sometimes and very often the best one because you know exactly where you want to land and you agree and you move on. It's again a high tribute to the image of Saint-Gobain, the position in North America. Mark, you take the second one on the.
Yes.
Before I hand over.
I think the question you're asking is based on the size of the sales and revenue per plant and per employee. I'd say there's a number of different answers for that. The first thing from touring the plants, as we do when we look at all these, you know, what we learn there are some very exciting things they do that we do not do. We take a lot of learnings where we can cross our network, and we see things that we do that they don't do back and forth. So we see great operational excellence and world-class manufacturing synergies through the organization, and that's what we think going forward. In a market that's very constrained, they have multiple product offerings.
They have engineered wood, they have metal, they have vinyl siding and shakes, so there's diversity across the plants from that perspective. There is some based on the channel to market and how they spread across the region. My answer is we think there's efficiencies. We think that every efficiency we can draw out of the business, that the synergy will help us grow further because we think there's constraint in the marketplace right now across North America, and this will allow us to fill it further.
Tobias, one point also because we cannot compare, I would say, apples and oranges. In the 11 manufacturing plants that we show on slide number 10 for Canada, keep in mind that you have big plants of gypsum.
Yeah.
Two big plants of insulation. These plants, they are capital intensive, and therefore they develop a huge turnover per plant. On the other side, the siding plant, they are low capital intensive businesses. It's extrusion lines, very flexible, low CapEx, so at the end, smaller sites. Therefore, you cannot make a pure ratio in terms of sales per head related to each plant, because we are not talking about the same process and the same products.
Coming to your third question, Tobias, say, EBITDA is $83 million, so EBIT is $80 million, so depreciation is very limited. It reinforces Benoit's point. The siding business is low capital intensive.
For the entire group, i.e. your $10 billion of revenues at the end and the $2 billion of EBITDA, what sort of EBIT should we be thinking of? Sorry, what sort of D&A should we be thinking of in percentage of sales, if possible, please, Sreedhar?
For the whole group, in terms of, I mean, you know, it is. We're talking about 16% versus 19%, no? It's around 3% , three points, so you can take approximately
Thank you so much.
Thank you. Next question from John Fraser-Andrews from HSBC. Please go ahead.
Thank you. I'll have a couple around the rollout potential of the products, the siding, vinyl and aluminum products. I appreciate that you're divesting the U.S. distribution. Is there any scope to take product from Canada into any parts of the U.S. or the technology into the U.S.? Is that the plan? What's in the $7 million of sales synergy? Is that just synergies within Canada or 'cause it doesn't sound like a great significant amount in terms of potential rollouts further afield. Thank you.
Mark, you take that question on the our product portfolio on both Canada, U.S., yeah?
The portfolio already is sold pretty broadly and widely. Their engineered wood is actually sold not only in Canada and the U.S., but also even in parts of Europe. From a metal perspective, they're manufacturing both in the U.S. and Canada and sell the products on both sides. However, certainly a huge opportunity to expand both those products that are primarily in Canada down into the U.S. from a rollout of product lines, and that's one of the exciting parts of the acquisition. From a sales synergy perspective, most of what's captured in there is cross-selling opportunities in their existing branches in Canada, where we can sell more CertainTeed products going forward.
A very small portion of what you would consider rollout. That is a large upside going forward. We're really focused on the synergy perspective on the hard cost synergies, as that's really what I think people look at when they look at these acquisitions. These are the simple layups of what's shown there, the simple layups of adding our products to the distributor locations or replacing competitive products in the distributor locations.
You know, it's indeed actually a very low-hanging sales that we have taken into account. Honestly, you know, in my view, the potential is much bigger. You know, I really prefer to emphasize more on cost synergies. If it is something which is clearly identified, we take it.
Sure.
Yeah.
No, thanks, for explaining that.
Mm-hmm.
Just a follow-up. In the sales, the $ 472 million of revenue, how much of that then is in the U.S.?
You know, if you think that $7 million, we are talking of maybe, you know, $3 million would be in the U.S. and $4 million will be in Canada.
No, I think the question is on the $472 million, how much is in Canada? The majority is in Canada, more than 50% is in Canada and around 47%, 48% is in the U.S. You know, where we think with Mark and Sreedhar, that the top-line synergy is rather conservative, that in order to deliver $7 million of additional EBITDA, we need $20 million in sales. You know, when you combine the $600 million of siding we have in the U.S. plus the $472 million they have across Canada and the U.S., adding you know $20 million on a $1+ billion is something really achievable. I feel confident, and I'm actually eager that Mark will deliver more. I'm sure he will deliver more. But that's clearly within reach.
When I see, you know, what Mark and the team have done in terms of cross-selling between roofing and siding, for instance, before, you know, the new organization of Saint-Gobain, we were selling a lot of roofing west of Mississippi, and our siding business was more east of Mississippi. We leveraged cross-selling opportunities, selling to people covering one territory with both roofing and siding for the exterior product distributor. We gained a lot of share with siding just by cross-selling roofing and siding west of Mississippi. If you think of what we can grow together with Kaycan on complementary product lines, I'm quite confident we'll get there.
Yeah. Very good. Thanks, Benoit.
Thank you. Next question from Mr. Lefèvre-Moulenq from CIC. Sir, please go ahead.
Yes. Bonsoir. Good evening, everyone. I have two questions mainly, as the others have already been addressed. First one, performance of Kaycan versus CertainTeed in focusing on siding. Siding margin of Kaycan is close to 17.5%. Could we have more color on that of CertainTeed, specifically to the siding? Secondly, regarding your slide, page 15, first consolidation of GCP, it is not in 2022. It should be in 2023 after the authorization of the competition watchdogs. Many thanks.
Yeah. Yeah, okay. Let me just answer one. As in terms of margin of siding, CertainTeed is more or less similar what you have in Kaycan. Coming to your point, of the slide number 15, it is just a pro forma. It just gives you a broad idea. You are right that, you know, it depends on the closing, but we are expecting the closing by end of the year.
This, at this point of time, it's a pro forma just to give you a flavor of all this strategic move which we're doing. Basically is going to double the profitability of North America for Saint-Gobain. That's the message to retain and not the nitty-gritties of the pie.
We wanted to highlight there, Jean-Christophe , that, you know, within our Capital Markets Day, in terms of capital allocation and balance of the geographic exposure of the group going forward, I had one slide where I said two to three years ago, we had 65% in Europe, 15% North America, 20% Asia and energy markets. Directionally, in the next years, and it could go a bit beyond the 2025 period of Grow & Impact, I want to have more balance, like 50% Europe, 25% North America, 25% Asia and energy markets. What we show on this slide, that we have been very decisive, very disciplined on the capital allocation, agile in our moves, organically and externally, and we'll get close to 20% of our total sales in North America on a pro forma basis by 2022.
That's, I think the spirit of moving from 15% to almost 20% in just two to three years and committing ourselves to the rebalancing of the geographic exposure of the group.
Benoit, Sreedhar, I have a follow-up question regarding the market share. I am not sure you quantify Kaycan market share in Canada and also CertainTeed market share in siding in U.S. Would it be possible, or is it too difficult?
You know, we are going to go through antitrust approval in the coming weeks. That's a discussion that we will have with the relevant competition authorities. Again, we are not in siding in Canada, there is no difficulty there. I tell you, our market share in siding in Canada will be the market share of
Kaycan.
Of Kaycan, which is the number one player in Canada. In the U.S., we are the number two. That means we still have room to grow and also expand and enrich the offer across other product lines besides vinyl siding.
Yeah, Kaycan in their percentage is not possible to know.
Sorry, again, the question.
Yes. Kaycan, number one. Okay. I understood that percentage of market share in Canada, it's not possible to have.
You know, if we have given to you some indication about the number of plants they have as compared to the top four players in the market, it will give you a rough idea because all the numbers are not public information.
It's again, it's something that we will define in terms of definition of the market in the next week. It's roughly 1/3. If you want to guess, estimate, it's roughly 1/3.
Okay.
On the siding, façade residential market in Canada.
Excellent. No, many thanks.
It's a meaningful. I guess that was the question behind. It's a meaningful number one position. Like we have meaningful, you know, we are number one in gypsum, plasterboard in Canada, coast to coast, as Mark mentioned. Yes, we are building meaningful positions across Canada, which is part of the top 15 countries of Saint-Gobain.
Many thanks for this transparency. It's very important. Merci, Benoit.
Thank you.
I know we have to speak both French and English in Canada, so, I'll keep switching.
Yes, it's very important.
If you need.
Thank you. We have a new question from Yves Bromehead from Exane BNP Paribas. Sir, please go ahead.
Thank you. Just two quick follow-up. One is if there's a Build Back Better and a focus on social housing, is actually vinyl siding one of the most advantageous and competitive products. Second, can you internalize some of the PVC costs with Chryso, or there is no synergy on that front? Thank you.
Yes, no, Yves, part of your question, which is very important, and I didn't want to add to that when you ask about vinyl siding rules versus other materials. In the last years is that vinyl is the best economic solution for façade on residential markets in North America. There is, as Mark mentioned, a geographic component in it in terms of what are the weather conditions, where vinyl siding is more relevant than others. For instance, fiber cement is not good in the north part of the U.S. in cold weather. Vinyl siding is much better. Second, vinyl siding is much more economical in terms of overall siding versus other spend. It's a factor of one to three when you take the most expensive solution versus vinyl siding.
Yeah. On the synergies on raw materials, yes, there are synergies on PVC purchases. If that was the question.
Great. Thank you very much.
There was a question of Chryso. No, frankly, we don't see synergies with Chryso or GCP, specifically for siding. Again, the wider purchasing-
Like PVC. PVC.
Oh, PVC. Sorry.
Sorry. PVC. Sorry.
PVC. No, no specific on PVC.
PVC. Okay. We both use very common materials, there's common suppliers and there'd be significant synergies on the purchasing end of raw materials for vinyl.
Great. Thank you. Have a good evening.
Thank you.
Thank you. We have no more questions for the moment. Ladies and gentlemen, just a reminder, if you wish to ask a question, please press zero one on your telephone keypad.
Okay. If we don't have any other questions, thank you again for your time on short notice. It's a major step for us in light and sustainable construction, totally aligned with our Grow & Impact strategy. Good growth in North America. You have seen the success both in top line and profitability that we have developed with Mark and his team over the last years. You know Mark well. He was there in Paris during our Capital Markets Day. We are all committed to make a fantastic success for both Kaycan and Saint-Gobain CertainTeed teams in North America and create a great level of value for Saint-Gobain shareholders. Thank you very much for your time, and have a good evening. Thank you. Thank you, Mark.
Thank you very much. Have a good day.
Thank you, ladies and gentlemen. This concludes the conference call. Thank you all for your participation. You may now disconnect.