There's more evidence of growth plans and strategy shifts than there is of outright failures when you examine Webb Analytics' list of M&A deals, openings, and closures for so far in 2019. Likewise, the tally for all 2018 gives the same impression, what with its new investors and plethora of greenfield store openings.
That said, so far this year, the 2019 map has more red dots (signifying closures) than green (for openings) or blue (for deals). Two of those nine closures mark the distribution centers for HDW, which closed its operations and began liquidation sales around Jan. 11. A company spokesperson blamed mismanagement and overreach for the distributor's demise.
The other seven closures belong to Alexander Lumber, which shuttered and merged yards as part of a shift in focus toward more urban locations.
As in 2018, most of the deals announced so far this year continue trends we've noticed for a while. There are roll-ups, such as Homewood Holdings' acquisition of Eagle Creek Siding and Mud Bay Manufacturing. There are strategic investments, such as BMC buying Barefoot & Co., helping fulfill its desire to get deeper into higher-margin installation services. And there are store openings, such as when 84 Lumber re-opened a site in Florida that had been shuttered for 10 years.
And there's one more trend in 2018 that has continued into this month: US LBM's initial public offering remains on hold. The company first gave notice in May 2017 that it wanted to go public, but it never pulled the trigger. It has even stopped updating its S-1 registration statement to the Securities and Exchange Commission. Those updates had been reporting the company's finances.
When you look at the Webb Analytics map for 2018 alone, you'll see at least 378 dots marking deals, openings, and closures. I say “at least 375” establishments changed hands, opened fresh, or closed because we’ve found over the years just how hard it is to get definitive numbers, particularly of closures. Please write to me at cwebb@webb-analytics.com if you see any missing spots on the map.
Here are the key numbers and findings:
A total of 74 deals involving 300 establishments were announced in 2018. ABC Supply’s six deals combined with subsidiary L&W Supply’s five purchases makes ABC the biggest dealmaker. SRS Distribution had seven transactions, and then came Construction Supply Group (CSG) with six deals and Kodiak Building Partners with five, while Foundation Building Materials did four acquisitions.
If you go by number of establishments acquired, American Construction Source dominated. Its acquisitions of Meek’s and Arrow Building Center took it from zero to 67 facilities in less than four months, and that’s after it closed six Meek’s yards. With more than $500 million in revenue, it could rank among the top 15 on the next ProSales 100 list.
CSG garnered the second-largest number of establishments through deals, snapping up 38 commercially oriented product suppliers.
The combination of ABC Supply and L&W Supply trailed CSG by just one at 37 total (26 for L&W, 11 for ABC). But if you also include ABC’s 13 greenfield openings, that company leads the way in total new yards flying its flags.
SRS also had 13 greenfield openings, trying ABC for No. 1 in that category.
Lumberyards accounted for 43% of the establishments that changed hands, while specialty supplier locations (mainly in roofing) figured in 27% of the deals.
An unusual quartet of states—Missouri, Minnesota, Wisconsin, and California—were home to one-third of the establishments involved in transactions. This mainly was the result of the Meek’s deal (the company really consists of two divisions: one based in Missouri, the other in California); and a variety of purchases in the Upper Midwest.
As a percentage of population, North Dakota had the most establishments go on the block, with 12. And there were 14 yards that got new owners in Maine.
Missouri topped all reported closures with seven, of which six were Meek’s stores. Illinois came next with four.
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