Just three years ago, only one pro dealer—Raleigh, N.C.–based Stock Building Supply—had eclipsed the $2 billion sales mark. In 2003, Eighty Four, Pa.–based 84 Lumber passed the milestone as well, and indications were strong that the two pro dealers might have some additional company by 2004. Company, indeed. Last year saw an additional four firms—San Francisco–based Building Materials Holding Corp. (BMHC); Beloit, Wis.–based ABC Supply; Redmond, Wash.–based Lanoga Corp.; and Dallas-based Builders FirstSource—breach the $2 billion sales threshold.
As the companies settle into the increased scale, however, there has been scant tooting of the horns. On the contrary, executives at several of the companies were quick to emphasize that titanic sales numbers in and of themselves provide little advantage in the contractor marketplace. "The $2 billion mark in itself provides very little benefit to our customers," says ABC Supply president and COO David Luck. "Our business is to serve our customers in individual branches and markets all across America. As a company we always try to remember that our customer does not care that we are big."
"We think every market is still a local market," agrees Lanoga president and CEO Paul Hylbert. "Even the big builders give a lot of autonomy to the local folks." Still, Hylbert says that rapid growth has to remain on the agenda as dealers becoming national in scope approach business opportunities with their big builder counterparts. "We're doing business with nine of the top 10 builders now, but it's not like we are in the top 100 [housing] markets," he says. "So while it's a significant milestone, it's not something that we get really excited about, because at the $2 billion level we're not big enough yet to start taking advantage of being in all of the larger metro markets to do increasing business with the real big builders."
84 Lumber is keeping growth on the radar as well, even as the company cruised past $3 billion last year. "Sure, we paused for a few minutes and enjoyed the moment, but hitting $3 billion and then eventually $3.46 billion in 2004 is history," says president Maggie Hardy Magerko. "We never look back or rest on our laurels. We look squarely ahead and keep moving toward the next level." For 84, that next level will be shooting for the $4 billion mark in 2005. In addition to an objective to open 50 to 60 new yards and 10 component plant locations this year, the company is also in the process of selecting a site for a Western regional headquarters that will mirror the corporate offices in Eighty Four.
The rest of the "Big Six" are following suit. Lanoga and BMHC have both recently made acquisitions of a millwork distributor and a Chicago framer, respectively, mirroring the overall industry trend to expand into new avenues such as construction services and installed sales (see "Contractor Services," above). At ABC, new milestone initiatives were announced at the company's national meeting closing out the 2004 sales year, including goals of $5 billion in sales and 500 branch locations (up from 275) as part of a six-year plan ending in 2010. Builders FirstSource is exploring the public markets with a planned IPO for next month, and Stock is increasingly leveraging its relationship with sister company Ferguson Enterprises. "We're just trying to be the best there is in distributing building materials and services to the professional contractor," says Stock CEO Fenton Hord. "If being large is a function of being the best, then we are happy to be large."