With earnings season for the quarter ended Sept. 30 nearly over--among the major public LBM firms, only Beacon has yet to report--it's clear most of the firms are pushing hard on investments while keeping an eye out for deals.
For instance, BMC used its Nov. 5 earnings call to announce it will more fully automate its truss operation in the Charlotte, NC, markets. That's the fifth region of the country where it will do so; plants already are running in Atlanta, Salt Lake City, and Austin, TX, and another serving the Seattle market is under development.
At the same time, Builders FirstSource (BFS) noted its 3rd-quarter purchase of Sun State Components, which has two truss facilities in Arizona and one in Nevada. That deal means BFS now has 61 truss manufacturing facilities nationwide, the company said. In addition, BFS plans to have two new greenfield truss plants running by year-end, along with eight new truss lines in existing plants.
But trusses aren't the only example of money being spent. On Sept. 16, BMC bought the two-unit Colorado Fasteners company. That comes on top of its Aug. 1 acquisition of Kingston (WA) Millwork and Supply and its Aug. 23 buy of Heritage One Door & Carpentry of North Highlands, CA. "In all, during the third quarter we added a total of nearly $100 million in projected annualized net sales from the acquisitions," CEO David Flitman told analysts Nov. 5.
All told, the big public dealers say they are on the hunt, but also picky. "We have a solid pipeline for future acquisitions, and we continue to selectively acquire businesses that meet our strategic priorities and enhance our North American presence," said Ruben Mendoza, CEO of Foundation Building Materials, whose two latest purchases took place on Oct. 1.
"You could see a pickup [in M&A]," said Peter Jackson, BFS' CFO. "There are a lot of deals out there, we're looking at some. We'll see how they shake out, but we're not going to go crazy. We're going to be disciplined about what we're doing."
And at BMC, the view is "there are plenty of opportunities," Flitman said, "including around 300 potential companies to acquire with annual revenues between $25 million and $100 million, plus about 100 companies even larger than that.
Lower lumber prices compared with last year made the top-line numbers at BFS and BMC look weak, but operating efficiencies plus the value-added component work improved the bottom line. Flitman said initiatives at BMC have produced more than $10 million in additional operating income since Jan. 1.