May 12, 2010

ABC Supply To Acquire Bradco; Deal Creates $4 Billion LBM Giant

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Bradco Locations

ABC Supply Co. announced yesterday it has reached an agreement to acquire Bradco Supply Corp. The move will create a super roofing and LBM distributor that's 25% bigger than ProBuild, the current No. 1 company on the ProSales 100. The ABC-Bradco network will unite 479 locations in 45 states with combined sales of more than $4 billion. (The maps show ABC’s facilities at top and Bradco’s at bottom.) The acquisition is expected to close by the end of June, following routine review for antitrust implications by federal regulators. Until the closing, Bradco's 129 branches will continue to operate independently of ABC.
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Other Recent LBM Deals
ProSales' Deals Database

Stock To Buy Bison, Expand in Houston

In a move that combines the Nos. 5 and 16 companies on the ProSales 100, Stock Building Supply Holdings LLC announced it will buy the assets of Bison Building Holdings, a Houston-based dealer that has been in Chapter 11 bankruptcy since last June. Raleigh, N.C.-based Stock intends to buy Bison's assets around June 29 under Section 363 of the federal bankruptcy code's Chapter 11.
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Builder 100’s Share of Total Housing Market Slips a Bit in 2009

America’s 100 biggest homebuilders accounted for 36.69% of the home sales closed in 2009, down slightly from 38.71% in 2008 and sharply below 2006’s high-water mark of 43.58%, Builder magazine’s latest Builder 100 reveals. The sister publication to ProSales says closings by the top 100 fell nearly 29% from the previous year. Still, 26 of the top 100 builders reported increases in closings compared with just five in 2008, Builder noted, and 16 banks enjoyed revenue gains, three times 2008’s showing. The 10 largest builders saw their market share of closings decrease to 20.41% last year from 22.69% in 2008.
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CEOs at Housing Leadership Summit Say the Market Has Hit Bottom

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Supplier Earnings Roundup: Boise Cascade Holdings, Louisiana-Pacific, BlueLinx

• Boise Cascade Holdings swung to a net profit of $11.4 million in the first quarter from a year-earlier net loss of $87.7 million, the company reported. The net income included $25.3 million from the sale of the remaining shares BC Holdings held in Boise Inc. On an operating basis, the company's operating loss shrank to $10.6 million in the quarter from $48.3 million a year earlier. Story
• Louisiana-Pacific’s loss from continuing operations shrank to $22.5 million in the first quarter from $30.3 million a year thanks to a 44% rise in net sales to $296.6 million that in turn was powered by higher prices for oriented strand board (OSB) and more housing starts. Story
• BlueLinx Holdngs shrank its net loss to $14.7 million in its fiscal first quarter ended April 3 from a $60.7 million net loss in the year-earlier period. Revenues rose 6% to $431.1 million--the first such year-over-year increase in four years--while overall unit volume increased by 1.4% from 2009's fiscal first quarter. Story

How Aligned Are Housing Starts, ProSales 100 Revenues? Only Partly.

It’s an article of faith among LBM people that sales by building material dealers—particularly the big ones who get into the ProSales 100—are closely tied to housing starts. But a look at ProSales 100 and starts numbers over the past seven years show that isn’t quite true. For every year, from the latest ProSales 100 report back to the numbers for 2003, PS100 revenues (the blue bars on the chart) have either risen faster than have housing starts (the magenta bars) went up or have declined less steeply than when housing starts went down. This suggests that dealers, while buffeted by the housing starts changes, are able to absorb at least some of those shocks.
This Year's ProSales 100 Story

A Former Green LBM Dealer Reflects on What Went Wrong

After more than four years of operation, a.k.a. Green, a green building products retail showroom in central Arizona, closed its doors in December. What happened? In an interview with EcoHome, a sister publication to ProSales, former owner Mick Dalrymple says he now wishes he had focused more on persuading builders and remodelers of green’s benefits.
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House Passes Caulkers Bill, Rejects Bid To Delay EPA Rule

The House last Thursday voted 246-161 to authorize Home Star, a $5.7 billion, two-year program dubbed "Cash for Caulkers" that would give tax benefits for energy-efficient home improvements. The measure now goes to the Senate, where it enjoys wide support plus the backing of the Obama administration. But the House also rejected an amendment that would have delayed the application of the Environmental Protection Agency’s new Lead Renovation, Repair, and Painting Rule. The National Lumber and Building Material Dealers Association has been a strong advocate of a delay. The rule is already having a chilling effect on dealers.
More on Home Star
EPA Lead Rule Costing Sales at 25% of Dealers, Survey Finds

Hanley Wood Residential Remodeling Index Forecasts Upturn in Activity

The level of remodeling activity nationally bottomed out in the first quarter of this year, according to the latest release of the Residential Remodeling Index (RRI) by Hanley Wood Market Intelligence, a sister company to ProSales. The seasonally adjusted first quarter national composite of the RRI declined less than 0.2% from the last quarter of 2009. The RRI forecasts a 1% increase in the second quarter of 2010, the first quarter-over-quarter improvement in two years. While the second quarter 2010 forecast still represents a 2% decline year-over-year, Hanley Wood forecasts continued acceleration of remodeling activity through the end of 2010 and into the beginning of 2011. That growth would rival what remodelers experienced in 2005 and early 2006.
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WebbThreads

• Executives from Beacon Roofing Supply gathered at the NASDAQ stock exchange headquarters in New York recently to ring the closing bell for that day’s official trading session. Beacon last week reported a loss of $6.5 million in the company's fiscal second quarter ended March 31. That's nearly triple its $2.4 million in fiscal 2009's second quarter. The company said the lower net income was due to a decline in sales and a lower gross margin rate, partially offset by lower expenses. Story
• Zarsky Lumber has purchased Coast Lumber of Port Aransas, Texas, which was foreclosed on and closed in December. It will be renamed Zarsky Lumber and will reopen soon.
• Biewer Lumber expanded its Lansing, Mich., distribution center.
• The Western Building Material Association has a new date and place for its annual convention. After years of alternating each November between the Seattle and Portland, Ore., areas, WBMA’s next convention will take place Feb. 9-12, 2011, at the Tulalip Resort in Marysville, Wash. More
• Kingston (Wash.) Lumber Millwork and Supply is moving out of its downtown location and combining operations into its six-acre facility near the town, a local newspaper reports. Story
• The Occupational Safety and Health Administration (OSHA) is looking for building inspectors in 11 areas to work with it on a pilot program designed to reduce injuries and deaths at construction sites. "I believe workplace enforcement is not only our responsibility but our moral obligation," Labor Secretary Hilda Solis said in letters to mayors of the 11 cities. "We need your help to send our inspectors where they can make the biggest difference." More
• After hitting a 60-year low, the share of Americans who moved edged up last year to 12.5% of the population, the Census Bureau reports. But they didn't go far as people were taking few chances because of the weak housing and job markets. Story

Industry/Product Briefs

• Weekes Forest Products will serve as iLevel’s new independent distributor of engineered wood products in Michigan. Weekes already distributes iLevel in Wisconsin.
• CertainTeed has introduced Landmark Solaris IR shingle, a line of solar reflective roofing that it says not cut roof temperatures but also provide protection against staining or discoloration caused by roof algae growth.
• AZEK Building Products announced that the new newly formed F.P. Supply, a business unit of Millman Lumber Co., will distribute AZEK in the Indiana, Northern Kentucky, and Cincinnati, Ohio markets.
• Cadsoft, maker of the Envisioneer software platform, has formed a strategic technology alliance with Luxwood, which produces three-dimensional design and estimating tools.
• Weyerhaeuser has introduced Weyerhaeuser Green Studs for the California and Oregon markets. They are independently certified to the Sustainable Forestry Initiative Standard and are Green Approved by the NAHB Research Center for use in the National Green Building Standard.
• Kolbe added its new Majesta oversized, double hung, wood windows to its collection of two- and three-dimensional window and door models used in Building Information Modeling software.
• Fiberweb recently named Boston Cedar as its 2009 Distributor of the Year.
• Metabo now offers a four-tool combo kit from the PowerMasterSeries of 18-volt lithium-ion cordless power tools.

Do you have a question, a tip, or a sage piece of wisdom? Feel free to contact ProSales' editor, Craig Webb, at cwebb@hanleywood.com.

And don't forget you can find previous ProSales Business Updates online!

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