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In 2021, Smaller LBM Deals (Plus Greenfield Openings) Are Adding Up to Big Numbers

LBM deals (blue dots), openings (green) and closures (red), YTD 2020. Not shown: One opening and one acquisition in Hawaii. Source: Webb Analytics

The construction supply M&A bandwagon heads into the final 10 weeks of 2022 having already racked up 31% more individual deals than in all of 2021, but dealmakers have a long way to go if they hope to match last year's number of locations affected.

Through Oct. 19, there have been 93 transactions involving 375 locations. That's well ahead of the 49 deals and 156 locations affected by this same point in 2021. But the final weeks of last year saw another 323 outlets change hands in just 22 transactions. And those numbers don't count the roughly 150 BMC branches that merged into Builders FirstSource.

Here's one way to show the difference from 2020: This year, the average acquisition has involved four locations. For all 2020, the average number of locations bought per acquisition was 6.7, and that number jumps to 9.6 if you include the BFS-BMC combination.

Among the most notable deals since mid-September, US LBM moved deep into Dallas-Fort Worth by purchasing Oldham Lumber, a primarily stick yard based in Dallas. The move followed Oldham's acquisition in late August of McKinney Lumber, which serves fast-growing markets north of Dallas.

Meanwhile, SRS Distribution grew markedly in Michigan by acquiring Wimsatt Building Materials, which has seven roofing/siding specialty stores in the Wolverine State plus one across the border in Toledo, OH. And the company's J B Wholesale Roofing unit opened a store in Murrieta, CA.

In the distribution space, intriguing news from Huttig prompted speculation that the publicly traded distributor could be sold. The company announced Oct. 13 it had "initiated a process to evaluate potential strategic alternatives to maximize shareholder value." Huttig declined to comment further, but HBS Dealer noted that Mill Road Capital, one of the company’s largest shareholders, made multiple offers to acquire the company last year.

The deals pace tends to obscure how busy some companies have been at creating new locations. So far, Webb Analytics has heard of 96 greenfield openings. That's 41% more than the 68 openings recorded all last year.

Closures, meanwhile, are down notably--just nine this year vs. 27 at this point in 2021--but news about stores shutting down often take far longer to get noticed than do green shoots and deals.

Here's what else has happened since mid-September:

* Genesee Lumber acquired Smith Lumber & Hardware of Lakeville, NY.

* Mill Creek Lumber & Supply bought Fox Building Supply, which has two branches in Oklahoma City and one in Altus, OK.

* Kodiak Building Partners added another Pacific Northwest dealer, this time going to the Olympic Peninsula to acquire Carl's Building Supply of Port Hadlock, WA.

* Nation's Best Holdings took over Gilmer (TX) Lumber and Howe, OK-based Ron's Lumber & Home Center.

* Koopman Lumber bought Fairhaven (MA) Lumber.

* Griffin Lumber & Hardware bought Baldwin Building Supply of Milledgeville, GA.

* ABC Supply opened stores in Centreville, MD, and St. George, UT.

* Beacon Building Products opened greenfield stores in Houston and in North Port, FL.

* L&W Supply opened a branch in New Castle, DE.

* SRS' Heritage Landcape Supply Group moved into Northwest Arkansas via a greenfield store in Springdale.

* Pleasants Hardware, a Richmond, VA-area, subsidiary of Norfolk-based Taylor's Do it Center, opened a new store in Quinton, VA. Taylor's plans to open another store of its own in Gloucester, VA, before year-end.

* Floor & Decor opened five new stores since mid-September, pushing it well above the 150 mark. The branches are in Bohemia, NY; Naples, FL; Waltham, MA; Oxnard, CA; and Tacoma, WA.

* Golden, CO-based Meyer Hardware closed.

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