Ask any of the dealers on this year's ProSales 100 to list his company's greatest achievement in 2008 and, more often than not, you're likely to get a two-word answer: We survived.
That's no small feat in an economy that has seen housing starts nationwide plummet more than three-quarters from their peak. It's partly why the average ProSales 100 dealer's 2008 total sales shrank by 14.8% from 2007 to $28.5 billion.
Given how recent economic reports indicate this year is going to be even worse than last, staying alive while trying to climb out of this daunting crevasse remains the primary goal of America's biggest LBMs.
"This is the new world," says Johan van Tilburg, president of Tindell's Building Supply in Knoxville, Tenn. "You have to learn to live in it."
Not everyone could. Scores of companies have gone out of business in the past 18 months, most notably PlyMart, the No. 19 company on last year's ProSales 100 and this magazine's Dealer of the Year for 2006. Those who haven't slipped off the cliff are hanging on because they are shedding everything–and often, everyone–that they can.
ProSales 100 dealers reported they shut 10.6% of their facilities, or 372 locations, in 2008. Virtually all were among the 10 biggest dealers, who collectively shut 367 operations. The leader was 84 Lumber, which closed 115 facilities in 2008, followed by Stock Building Supply with 88 closures and ProBuild with 58.
As for personnel, the 50 biggest companies on this year's list that also took part in last year's survey cut their payrolls by 23%, or close to 20,700 workers. Seven of the 50 cut their payrolls by at least 40%. The biggest numbers of pink-slips were issued at Building Materials Holding Corp. (BMHC), which let 5,800 employees go, followed by 84 Lumber with about 4,600 cuts in 2008.
"There is no one I know that is making money," says Brent Hanby, executive vice president and CFO of National Home Centers, the Springdale, Ark.?based dealer that saw overall sales fall 24.3% to $144.7 million in 2008. To get through the year, National Home Centers cut its employee total from 700 to 530 by the end of last year. The dealer shed its smallest facility in Hebrew Springs, Ark., too. Says Hanby: "I think everybody is in downsizing mode."
Actually, 15 members of the ProSales 100 reported a sales increase in 2008. This group includes ABC Supply (up 9.7%), Beacon Roofing Supply (up 8.4%), and Erie Materials (up 7.5%), all of which focus on the sale of roofing materials as opposed to traditional sticks. Others grew in part because of acquisitions or because their markets took longer to slump than the rest of the country.
ProBuild Stays #1
ProBuild remained the No. 1 company on the ProSales 100, with sales to pros worth $3.83 billion and sales of all types totaling $4.4 billion, about 12% less than in 2007. Stock continued to hold the No. 2 spot despite a 23.5% fall in total sales. ABC Supply passed 84 for third place, while Beacon moved ahead of BMHC into fifth. Rounding out the top 10 were Bradco Supply Corp., Builders FirstSource, Carter Lumber, and McCoy's Building Supply.
Collectively, the top 10 accounted for roughly 69% of the sales, employees, and facilities in the entire group. They also produced most of 2008's notable headlines and are doing the same in 2009. That's particularly the case at Stock, whose U.K.-based owner, Wolseley Plc, is seeking a joint-venture partner to run Stock. If it doesn't find one, Wolseley has said it will exit the business, leaving uncertain the fate of more than 8,000 workers at roughly 200 facilities across the United States.
Meanwhile, BMHC slashed the number of employees and facilities (including moving its headquarters to Boise, Idaho, from San Francisco), but it still has had constant trouble meeting its lending covenants. 84 has just half the number of employees it did two years ago, and Builders FirstSource's net loss deepened six-fold in 2008 to $139.5 million.
Even ProBuild hasn't been immune. The Denver-based company announced 12 acquisitions in 2007 but only five in 2008, and it hasn't done any deals since October. It ended up closing 55 locations last year and was looking to shut another 31 by the end of this month. It has spent much of its time recently reorganizing itself. ("The Team Within")
The most notable addition to the ProSales 100 was SRS Acquisition Corp. of McKinney, Texas. In the past year it has burst onto the roofing scene by purchasing a number of companies–Suncoast Roofers Supply in Florida, Southern Shingles in Texas, Wilson Wholesale in Illinois, and Rowe Supply in Georgia. By the end of 2008, its companies collectively were tallying $120 million in sales, all to pros.
Download 2009 ProSales 100 List (PDF)