One of the biggest trends in television is the anthology series, in which the show’s name stays the same year after year, but each season features a different plot and characters. Think Fargo, American Horror Story, and True Detective. In construction supply over the past quarter century, we’ve had our own anthology series. It’s the story of the Building Materials Corporation, better known as BMC.
This show’s name started as BMC West, a Boise, Idaho-based traditional lumberyard that sprang out of Boise Cascade. From there it moved to San Francisco and became a holding company called BMHC that held both BMC West and a huge framing service called SelectBuild. Then it was back to Boise as BMC Select during the housing crash, when it reorganized under Chapter 11 bankruptcy law. And now it’s in Atlanta as BMC Stock Holdings, having burst from its old territory west of the Mississippi to take over Stock Building Supply and several other ProSales 100 giants. At No. 2 on the ProSales 100 among full-service lumberyards, the company that prefers to simply call itself BMC has never ranked higher.
Just as every anthology series aims to entertain the viewer, BMC’s president and CEO, Peter Alexander, says his goal is the same as when Don Hendrickson ran BMC West a quarter century ago: Take care of the local customer. But how that happens has changed with each iteration of the company.
Seeking to Lead With Innovation
Alexander—arguably the only ProSales 100 CEO today who can write you an email in Swedish, having studied there as an undergrad—has pushed both an advanced and a conservative strategy. BMC has won ProSales Excellence Awards for its advanced website, its high-end showrooms, and its back-to-the-future Ready-Frame system, which at its core brings Sears kit houses into the 21st century. The company also pushes lean manufacturing principles.
At the same time, thoughts of selling to commercial rather than residential builders “take us out of our wheelhouse,” Alexander says, and framing services occupy a far lower share of total revenue than in the SelectBuild days.
So, what does matter to Alexander and to BMC? “As we look forward, everything we try to do is create value,” he says. “Day in and day out, [we’re] trying to do better the next day. We’re trying to reduce builders’ headaches, and that’s not exclusively selling more and more. It might be doing more pre-engineering. We’re going to lead with structural, we’re going to lead with millwork, we’re going to lead with Ready-Frame. For everybody in our landscape, BMC is going to be known as an innovator in the industry.”
Good timing can help a reputation. BMC’s Ready-Frame product, born in the Pacific Northwest half a decade ago, is now rolling out nationwide amid a crying need for framers. Ready-Frame takes computerized home designs and then cuts to measure and labels all the lumber needed to frame a home. BMC says Ready-Frame reduces both the number of framers needed and the time required to do the work by roughly 20%, all while improving jobsite safety and eliminating waste.
“When we did Ready-Frame five years ago, we saw a labor shortage, but we never thought the labor shortage would be as big as this,” Alexander says. It’s now a $104 million product, and in Seattle BMC sells more Ready-Frame packages than traditional housing packages.
Rising from the Ashes
The BMC that Alexander took over in July 2010 had been out of a Chapter 11 reorganization for only seven months. In the mid-2000s, its predecessor had $3.25 billion in revenues, more than 21,000 employees, and 180 facilities. By the end of 2009, it was unprofitable at $700 million in revenue with 3,700 workers. Revenue fell again in 2010 to $600 million, and it took a year after that to post an operating profit.
But even in those days the company was looking to grow. It bought land in Denver in December 2010 for a new distribution facility, opened a new yard in Houston in February 2011, and acquired a millwork operation in northern California in November 2013. It opened design centers and then, oddly at the time, announced plans in May 2014 to move to Atlanta.
The logic behind that move didn’t reveal itself until June 2015, when BMC announced it was merging with Stock Building Supply, at one time the nation’s biggest lumberyard but by then recovering from a Chapter 11 reorganization. BMC’s Western focus married well with Stock’s stronghold on the Atlantic coast. And while that deal was in the works, BMC also was absorbing two other PS100 companies: VNS of Valdosta, Ga., and Robert Bowden Inc. of Marietta, Ga. In less than a year, BMC went from virtually nothing to Georgia’s biggest dealer.
Thanks to both internal growth and those acquisitions, BMC posted total sales of $3.09 billion in 2016, not far from the $3.25 billion BMHC recorded a decade earlier. The company operates from coast to coast, and the executive office is so busy that BMC recently hired a former Dow Chemical exec, Michael McGaugh, to serve as chief operating officer.
There’s been one other big change in the company this past year: By taking over Stock, BMC has become a public company. That has enabled its investors to cash in some of their stake, but it also subjects BMC to the scrutiny of market analysts who keep a close eye on quarterly numbers. The fact that the company’s revenues grew by 10.5% last year should help, Alexander thinks.
Worrying about both long-term and quarterly growth “aren’t mutually exclusive,” says Alexander, whose resume includes a stint as ORCO Construction’s president and as a principal at G.E. Capital. “What you’re doing quarter to quarter should build long-term results.” He says one of his bigger challenges is making Wall Street understand that publicly traded LBM operations aren’t all alike. “This is not your daddy’s old lumberyard anymore,” he says.
One thing that corporate leadership has pushed hard lately is ensuring BMC is a unified culture, something that plagued ProBuild during its brief life as an LBM giant. Asked to name his points of focus when he talks to employees, Alexander said point No. 1 is, “Is there a high degree of confidence that there’s one single plan?”
After that, he says his message is this: “Every day, do what you do best. Be a solution provider, take care of your customer, bring forward a solution that addresses a pinch point for builders. Do those things right, and the numbers will take care of themselves.”
From our files: This Timeline Tracks BMC's and Stock Building Supply's History
