The newly named chief executive officer of BMC Select, one of America's 10 biggest construction supply companies, stressed today that his focus is on creating a tops-in-quality, tops-in-service construction supply company that will prosper even in these economic dog days for housing.
"To us, it's not important to be the lead dog in revenue," Peter Alexander told ProSales in a telephone interview. "For us, it's important to be ... best in customer service and reputation and financial strength."
To that end, Alexander said that when he asks himself how the company is doing, he thinks first of such metrics as fulfillment rates, on-time delivery percentages, and inventory turns. Only after that come financial performance measures and market share growth. Alexander noted that the company created several best practices councils earlier this year to find ways to improve operations in areas such as truss and components manufacturing, credit practices, sales, and customer service. "We expect to see fruits from these efforts this year," he said, adding later: "If you execute on the business plan and your service level is high and the efficiency is great, the financials will take care of themselves."
While the company's personnel announcement described BMC Select as "well positioned to aggressively advance as the economy rebounds," Alexander indicated he won't be sitting on his hands waiting for housing starts to jump. "Until the banking industry starts lending with more normalcy, I believe this is going to be a tough business," he said. "We are making investments. They are targeted, bullet-focused [measures] that make a difference with the customer and make us more lean and mean with customer service. We're not going to wait for the market to come back to make the right investments."
Those investments could include expansions to new Western markets as well as a deepening of activity in the 16 markets where BMC Select already operates, Alexander said without elaborating.
The interview took place just five days after Boise, Idaho-based BMC Select announced that Alexander, former president of ORCO Construction and more recently a BMC Select board member, would become the company's new chief executive officer effective Aug. 1. In addition, current CEO Paul Street will become chief administrative officer, while current president and chief operating officer Stan Wilson will retire at the end of this year.
BMC Select serves 11 states and 16 markets, all of them in western states except for a small operation in North Carolina. According to the latest ProSales 100, it reported revenues of $700 million last year, 95% of it to pros. That put it ninth on the latest list, although recent consolidations further up the ProSales 100 have since moved it into the No. 8 spot.
Asked to describe in a nutshell what BMC Select does, he replied: "We provide building supplies and services in the Western United States." The company's target market is the pro customer, but how BMC Select caters to that customer will vary by market, he said. "We have a pretty large breadth of large and small customers, and the small customer doing customized houses is just as important as the large customer," Alexander said. Later, he elaborated on that by noting the company also is now involved in, and will continue to be involved in, some commercial construction work.
"We've got a much broader mix of [residential and commercial] customers than I had first thought when I first joined the board," he said. "We can offer materials and services on both sides." He said that current CEO Paul Street's assessment of BMC Select's business, made in a January interview with ProSales, still holds true: the company gets about about half of its revenues from selling building products and half from its truss plants, millwork shops, and construction services, but the revenues from those two sides vary widely depending on the market.
BMC Select came into being on Jan. 4 when its predecessor, Building Materials Holding Corp. (BMHC), emerged reorganized after half a year of protection from creditors under Chapter 11 of the federal bankruptcy laws. With that change, it moved from a stockholder-owned public corporation to a private entity owned by BMHC's secured lenders, particularly Wells Fargo Bank.
The reorganization--helped tremendously by a change in tax laws that enabled the former BMHC to apply 2009 losses to profits as far as five years back--enabled BMHC to slash its debt by more than half and get more favorable credit terms than it might have otherwise.
"We find ourselves in a unique position now because of the strength of our balance sheet," Alexander said. "... We're sitting in a very good position in our industry."
Alexander said BMC Select's roster of shareholders today "goes far beyond Wells Fargo"--BMC Select now has 55 major stockholders, a spokesperson noted--and the board consists of independent figures rather than major stockholders.
