What used to be the Wisconsin, Connecticut, and New York operations of Stock Building Supply now will be owned by a newly formed entity created by two equity firms and run by a former Stock executive.
Tuesday's announcement said the operations will keep the names they had before being acquired by Stock or that were given once Stock shed them--Wisconsin Builders Supply for Wisconsin, Bellevue Builders Supply for the New York stores and East Haven Builders Supply for the Connecticut operations.
As previously reported, Building Industry Partners (BIP), a Dallas-based private equity firm, was identified in July as the firm that planned to buy the three operations. Now BIP has joined with BlackEagle Partners LLC of Bloomfield Hills, Mich., a private equity firm that specializes in turnarounds and what it calls "special situations," to sponsor a new entity called US LBM Holdings LLC.
US LBM will be the holding company that will buy the three operations from Stock. The firm's president and CEO is L.T. Gibson, a longtime Stock executive who until August was vice president of Stock's North Central U.S. operations.
The new US LBM will oversee 13 locations and more than 500 employees. It didn't give a dollar figure for the sales those companies represent, but it did say that if it existed already, it would rank 15th on the ProSales 100. That would suggest sales volume close to $250 million.
"The company will serve as a platform to make further investments and acquisitions in the pro dealer space, often in partnership with current ownership and management, that enables businesses to operate as autonomous local divisions with the capital and other resources of a much larger national organization," the press announcement said.
Gibson told ProSales that US LBM's executive team will feature a number of people who each have decades of experience in the building materials industry, often with Stock. For instance, vice president of finance Brian Hein joined Stock in 1988 and was a business analyst at Stock Building Supply, while human resources director Karen Charielle worked six years at Stock and has 20 years of experience in the industry.
"We've found a great partner with BlackEagle," Gibson said in the press release. "They have repeatedly shown a commitment to the success of our business in addition to providing the strategic resources that adds value to our organization in this difficult environment. Operating as an independent company again allows us many of the freedoms to improve services to our customers. A customer can walk in and talk to the people that make the decisions. We feel that's important."
"US LBM will continue to look for outstanding private pro dealer businesses and management teams that are seeking an equity capital partner to bolster working capital, support organic and acquisition-related growth initiatives and be in position to prosper coming out of the current U.S. residential construction downturn," Matt Ogden, BIP's managing principal, was quoted as saying.
Stock acquired what are now US LBM's operations over the years as it grew rapidly under the ownership of Britain's Wolseley Plc. At one point it had more than 350 facilities, close to $5.5 billion in annual revenue and 17,000 employees in roughly 50 markets nationwide. But the housing crash hurt it particularly hard, forcing it to close hundreds of yards and incur crippling rental charges on those shuttered yards.
On May 5, Wolseley sold 51% of Stock to the Gores Group, a Los Angeles-based private equity firm, and the next day Stock filed for protection from creditors under Chapter 11 of the federal bankruptcy code. It emerged from Chapter 11 on July 1 with plans to operate roughly 97 branches and 3,500 employees in 19 markets nationwide. New York, Wisconsin, and Connecticut didn't make that list.
"The restructure for us was difficult," Steve Short, Stock's senior vice president for operations, told ProSales in an interview today. "We left a lot of places that made us good money and we separated from a lot of good associates. With these three markets, we were able to work with [the acquiring groups] to create a positive outcome. It's a fabulous [management] group up there."