Malibu's Idea of a Lumber Yard
Stock's Recovery Plan Hinges On Lease Changes and a Diet
By the time this magazine is in your hands, Stock Building Supply might be a significantly smaller company that what it was at the start of the year.
Since 51% of America's No. 2 LBM operation was acquired May 5 by the Gores Group, a Los Angeles-based private equity firm, Stock has entered Chapter 11 bankruptcy law protection for creditors. It was slated for an appearance in U.S. Bankruptcy Court on May 28 in hopes of rejecting more than 200 lease agreements, many of them for facilities that Stock has closed since mid-2006.
One person who's following the bankruptcy petition closely is Jimmy Davis, a developer and general contractor in Pendleton, S.C. Davis has watched the facility in Anderson, S.C., that he leased to Stock sit empty for several months. But then Davis heard rumblings of Stock's financial woes.
"I checked with them two months ago and they assured me not to worry," Davis told ProSales in May "They said there would not be any problems."
In the meantime, two companies inquired about the facility and offered to buy the lease, Davis said. In both instances, he said Stock officials told him the facility would reopen once the market turned around. Davis noted the dealer continued to pay him "like clockwork."
"But they would not release it, and it wasn't going to cost them a dime to release it," Davis says. "Now they have me over a barrel."
Davis' building is one of more than 165 facilities that Stock shed in the 24 months prior to its Chapter 11 filing. At its peak, the company had roughly 365 locations and 17,000 workers. By early May, it had just under 200 locations and 7,220 employees.
Since the filing, Stock has begun taking steps to cut even more. It said in its Chapter 11 filings that it envisioned dropping to fewer than 5,000 workers. Stock also said it would close more facilities, but wouldn't say how many. By mid-May, reports were coming in of closures around the country.
Ply Mart's Mahaffey Brothers Are Back With a New Business
Randy and Rich Mahaffey, the Georgia brothers who led Ply Mart when it became ProSales' Dealer of the Year in January 2007 and were pretty much out of business 18 months later, have returned to construction supply. This time, they are the force behind PMC Building Materials in Marietta, Ga.
The single unit dealer–a former Ply Mart site–opened last September and now is pulling in between $300,000 and $400,000 per month, said Randy, one of the co-owners. The business split is quite different from what the former Ply Mart was accustomed to in its heyday. Then, 85% of sales were derived from new home construction; today, sales are 60% from remodelers and about 40% from new home construction.
At its peak, the Marietta facility's counter sales alone were cranking out more than $1 million a month and it took seven counter personnel to handle the traffic. Then the Atlanta housing market tanked. But even with today's weak market conditions, the Mahaffey brothers saw an opportunity to recapture that magic.
"We felt that if we were able to acquire this property from the bank, we could replicate the counter business we once had," Randy told ProSales. The Mahaffeys are now looking to build a new company, aiming for annual sales of $40 million to $50 million in the next five to six years, through three or more locations in metro Atlanta. "We have some definite ideas on how we would like to service the market," said Rich, who also is a co-owner.
A famished housing market and a wave of debt proved too large to overcome for Ply Mart, which at its zenith operated 34 locations with sales of nearly $350 million and won honors from ProSales. Last summer, the company went bankrupt and disappeared.
In keeping with its new remodeler focus, PMC Building Materials concentrates on selling roofing and siding–the dealer carries more than 20 different types of lap siding–along with a full line of windows and interior and exterior doors.
Denair Lumber has opened a new branch in Riverbank, Calif. ... Erie Materials, cited in our January issue as ProSales' Dealer of the Year, named Chris Neumann as its president. Bob Neumann takes the CEO title. ... Ed Sheen, owner of Minden Lumber & Concrete Co., received the Nebraska Lumber Dealers Association (NLDA) Dealer of the Year award. Ron Hein of Roberts & Dybdahl Inc. received the NLDA Marketing Representative of the Year award, and Central Lumber Sales received the Supplier Company of the Year award. ... Randy Kelley, president of Cedar Rapids Lumber Co., received the 2009 Iowa Lumber Association (ILA) Dealer of the Year award and Jack Derrick of Building Products Inc., received the ILA Marketing Representative of the Year award. ... AZEK Building Products president Ralph Bruno resigned effective May 14. He will be pursuing other business interests and will continue to hold a minority stake in the company. AZEK also named Brian Kincaid as its new vice president?marketing. ... Huttig Building Products appointed president and CEO Jon Vrabley to the additional office of interim CFO. ... Kohler Co.elected David Kohler as its president and COO, Jim Westdorp as group president?kitchen and bath, andJeffrey Mueller as president?global faucets. ... Simonton Windows named Deanna Rivera to the position of district sales manager responsible for Florida's central and southeast districts. ... Vice President Joe Biden, Sens. Dick Durbin and Roland Burris, and Chicago Mayor Richard Daley visited Serious Materials' new windows manufacturing plant in Chicago.
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Send your company's news, announcements, and events to Andy Carlo, via e-mail acarlo@hanley wood.com or fax 202.785.1974.