Top executives of ProBuild, Stock and BMC Select (formerly Building Materials Holding Corp., or BMHC) took time out last month during the International Builders' Show (IBS) in Las Vegas to talk with ProSales editor Craig Webb. Here's a roundup.
ProBuild Beats Revenue Forecast
Last October, ProBuild CEO Paul Hylbert told Mountain states dealers that he expected 2009 sales would total $3 billion, or one-third less than the $4.4 billion the Denver-based company took in the previous year. Now he believes ProBuild took in $3.2 billon last year.
He credited the surge in part to an increased sales force (ProBuild has hired more than 200 sales reps in the past year) and to the fact that some competitors had gone out of business. "We were pleasantly surprised with our increase on the top line. It's been very strong compared to [earlier forecasts]," he said.
ProBuild has marketed itself heavily as a company that can serve many national builders in every one of their markets. Hylbert said the company sees itself continuing to provide raw materials and manufactured products and is looking to increase the amount of installed sales it does. "We are very concerned about the availability of labor," he said. "When the market recovers, builders will be scrambling and we'll be scrambling. ... No question, we'll be doing more in installed sales."
To that end, ProBuild has been gearing up by increasing its organization of installed sales teams and working on standard practices, such as the best way to install windows.
Hylbert said ProBuild continues to develop and reap gains from extensive efforts in technology that span from manufacturing to yard operations to central services.
For instance, he said the use of technology has helped ProBuild's framing, components, and millwork operations learn how to engineer and design products that use fewer raw materials. The result is cost savings that ProBuild shares with its customers. Likewise, a long-secret robotic truss plant in Florida has yielded insights into lean manufacturing that ProBuild has exported to its other, less advanced facilities, he said.
Stock Looks To Grow
If 2009 was the year for Stock Building Supply to shrink, 2010 is shaping up as the year the dealer will return to growth, president and CEO Joe Appelmann believes.
Stock emerged last July 1 from Chapter 11 bankruptcy protection with roughly half its previous number of locations and a focus on just 19 markets nationwide. Now the company has hired Matthew Spain, formerly of the global bank UBS, as its new director of business development. Appelmann said Spain will be looking at the possibility of making acquisitions that go beyond its current territories.
Stock also is hiring a group of sales staffers whose only job will be to find leads and then pass those prospects over to sales reps. "If you believe business will come back in 2010–and we do–you have to make an investment in sales," Appelmann said.
Stock had said in bank documents last year that it expected its annual revenues would drop from $3.2 billion in 2008 to roughly $1 billion in 2009. That $1 billion estimate for last year "wouldn't be far off" from the reality, Appelmann said during IBS, and going forward the prospects are good to climb higher. In addition, he said, Stock still expects it will be positive on its EBITDA (earnings before interest, taxes, depreciation, and amortization) through its fiscal year, which ends June 30.
Operationally, Appelmann said he continues to focus on metrics that emphasize cash management. He said "Visual Management Boards" have been posted in Stock's Raleigh, N.C. headquarters–usually near the restrooms–so that employees can get regular updates on how the company is doing in terms of safety, the dollar value of products delivered per load, and the company's performance on deliveries.
Appelmann said he has become a proponent of OTIF, an acronym for "On Time/In Full" that attempts to measure the percentage of deliveries a company makes in which the goods arrive at the job site on time and with everything the customer requested.
He also believes strongly in installed sales prospects, particularly with regard to potential federal government programs that promote energy efficiency. Stock today installs insulation in half of its 19 markets and sells insulation in all markets, Appelmann said.
New BMC Select Stresses Continuity
The CEO and president/COO of BMC Select described their newly named, newly reorganized company as a smaller and more focused version of its predecessor, but essentially a continuation of the building materials dealer it was before it entered Chapter 11.
"The footprint is smaller and we've gone back to our core: distribution, trusses, wall panels, millwork, targeted construction services," CEO Paul Street said. The firm no longer will provide such other homebuilding services as doing plumbing or electrical work, he said.
President/COO Stan Wilson added that while BMHC was best known for pursuing production builders–particularly at its SelectBuild group–the new BMC Select will pursue a mix of customers, from big to medium-sized builders to a builder creating "the weirdest custom house you can do."
As customer focus widens, the number of vendors Boise, Idaho-based BMC Select uses and the mix of products it produces will narrow.
BMC Select serves 16 markets in 11 states. All of them–except for North Carolina and Texas–lie between Colorado and the Pacific coast. Street said he expects the company's revenues will fall below $1 billion this year.
It should turn a profit by December, he said.
What was BMHC entered Chapter 11 last June and emerged on Jan. 4 reorganized and renamed BMC Select. It moved from a stockholder-owned public corporation to a private entity owned by BMHC's secured lenders, particularly Wells Fargo Bank.
BMC Select is now emphasizing continuity. A key marketing brochure is titled "Same People. Same products and services: Let's Keep Building."
Likewise, the executives noted BMHC was on the road to restructuring long before going into Chapter 11. One key move came when BMHC merged its BMC West and SelectBuild units. BMC West focused on building materials distribution, while SelectBuild was best known for providing turnkey services for production builders.
The bankruptcy was more about a corporate restructuring than it was about the credit and legal benefits that comes from reorganizing, Street said. "We never gave up on the basic idea of providing targeted services."