A new Forbes magazine article reveals the near-collapse of 84 Lumber when the housing market's crash drained cash from a company that already had been making ill-advised operational moves and was spending lavishly--even foolishly--on a resort that 84 founder Joe Hardy had created.
"If 84 Lumber’s revenue had teetered the wrong way by $500,000 during the worst of it, a six-month stretch from late 2008 through May 2009, [84 president Maggie Hardy Magerko] would have been forced into not just corporate but personal bankruptcy," declared the article, slated for Forbes' Feb. 9 issue. "On paper she was basically broke."
The financial travails of the fifth-biggest company on the ProSales 100 have been known for several years, particularly when Magerko chronicled the company's difficulties in 2010 as 84 applied for a federal block grant. But those revelations didn't come close to revealing the depths to which 84 had sunk and what it had to do to recover.
Among the points cited in the article:
- Joe Hardy used to drink a couple of martinis, set a finger down on a map and declare that would be where 84's next lumberyard would be located. “That’s how strategic we were. I swear to God,” Magerko is quoted as saying.
- Sales for 2014 are estimated to be up about 10% to $2.3 billion, while operating profits have swung from a loss of $42 million in 2009 to a profit of $101 million in 2013. No 2014 profit figure was reported.
- The Hardys have spent more than $600 million on Nemacolin, a parcel of land that Joe Hardy bought on a whim and turned into a lavish resort. There was no limit at Nemacolin," Magerko told the magazine. "I don’t mean to be bragging. We just had so much money."
- By 2006, 84 had $425 million in unpaid customer receivables and a financing arm with $318 million in outstanding loans to builders. But the housing market was so good that the numbers didn't raise concerns. “I will tell you, personally, we didn’t know what the hell we were doing,” Magerko said. “Really had no clue. But everything was going right.”
- When conditions were at their worst, Joe Hardy urged Magerko to file for bankruptcy protection. But Magerko chose instead to "bet everything she had, from her jewelry collection to her personal checking account, on her ability to turn 84 Lumber around."
- Company debt has been cut from $558 million to about $200 million.