The CEO of ProBuild said today his firm finished 2009 with $3.2 billion in revenue, about $200 million above earlier expectations, while the president and CEO of Stock Building Supply said his operation, which emerged just half a year ago from Chapter 11 reorganization, is looking to make acquisitions and enter new markets to expand its $1 billion revenue base.

Paul Hylbert of No. 1 dealer and Joe Appelmann of No. 2 Stock spoke in separate interviews with ProSales at the International Builders' Show in Las Vegas.

ProBuild

Hylbert had told Mountain states dealers in October 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 (story). Today, he credited the unexpected increase 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 plan."

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.

The company's main accounting and sales-tracking system, ProEdge, has cost the company tens of millions of dollars in recent years but now is beginning to pay off, he said. Seventy locations, all in the Southeast, have begun using ProEdge, enabling the company to decommission an old, legacy system. ProBuild dealers in the Northeast will come up next for conversion.

Hylbert said ProEdge's key benefit is that it will help standardize how the companies does business. It also provides data to ProBuild's analysts more quickly than previous systems.

While much of Hylbert's work in the past year has focused on standards, he also noted that this isn't the same as one-size-fits-all conformity. For instance, regarding concerns that centralized purchasing would remove local variety, he said, "We've got to tailor the assortment of products to the needs of the local market."

Stock

It was just over six months ago that Stock emerged from Chapter 11 bankruptcy protection from creditors with roughly half its previous number of dealers and a focus on just 19 markets nationwide. It also had said in bank documents that it expected its annual revenues would drop from $3.2 billion in 2008 to roughly $1 billion in 2009.

Today, that $1 billion estimate for last year "wouldn't be far off" from the reality, Appelmann said, and going forward the prospects are good to climb above $1 billion. In addition, he said, Stock continues to expect it will be positive on its EBITDA (earnings before interest, taxes, depreciation, and amortization) through its fiscal year, which ends June 30.

In fact, Stock is looking to grow. The company recently 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 Stock's current 19 markets. Spain also is responsible for hiring a group whose only job will be to finding leads and then passing 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.

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. Appelmann said his OTIF goal is 95%; he thinks it's currently around 84% to 86%. The company recently hired Mike Butts, a consultant and expert on LBM management--particularly installed sales--to serve as Stock's new director of installed sales. (Butts also is a ProSales columnist.)

Appelmann also believes strongly in installed sales prospects, particularly with regard to potential federal government programs (often dubbed "cash for caulkers") that promote energy efficiency. Stock today installs insulation in half of its 19 markets and sells insulation in all markets, Appelmann said.