Stock Building Supply laid out a growth strategy to current and potential investors today that seeks to capture more of what it calls the "white space" in housing's recovery through expanded products and services, a more efficient e-business platform, and entrance into new markets.
Stock, the ninth-biggest LBM operation on the latest ProSales 100 list, detailed its plans in a presentation to investors—one of a regular series that it makes. Most of the document provides essentials on a company that has been publicly traded for only a year, such as its July 29 announcement that net income more than doubled in the second quarter from the year-earlier period to reach $5.6 million, while sales climbed 9.5% to $344 million.
But even bigger and better numbers await, Stock's presentation implied. Last year's 618,000 single-family housing starts were 40% below the U.S. 50-year average, meaning there's significant room to grow from today's levels. Stock also pointed out on one slide what it called "significant white space for profitable growth." That slide reported that the geography where Stock does business contains just 22% of all single-family home construction. In addition, Stock said it holds less than 10% of the "wallet share" for single-family new construction and less than 1% of the total share of spending for repair and remodel work.
Atop a base strategy of taking part in the market's recovery, Stock said it will seek to increase its market share through superior logistics, the ability to sell materials for the whole house (as opposed to specializing in one product category, such as roofing or siding or lumber), and expanding its products and services offerings. Those products and services include new and bigger structures plants and millwork capabilities.
In addition, Stock said its so-called LEAN eBusiness Processes have reduced shipping and handling costs to 5.2% of sales in 2013 from 6.6% of sales in 2012. The company's OTIF number—the percentage of deliveries that arrived on time and in full—topped 92% in 2012 and 2013, it said. That's on a business that last year served roughly 12,000 unique customers with deliveries to 86,000 jobsites in 21 markets across 14 states.
About 74% of 2013 sales were to single-family builders, half of them production firms and the other half custom builders, Stock said. Remodelers figured in another 17% of sales, multifamily firms and light commercial businesses 3% each, and "other" firms 3%.
Stock said brownfield and greenfield expansions are "in process," but didn't name any particular sites in its presentation. It did note that since 2010 it has acquired businesses in Houston, Atlanta, northwest Arkansas, and Tidewater Virginia.