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New Markets, New Ideas Stand Out Among the Summer's Latest Construction Supply Deals

LBM deals (blue), openings (green) and closures (red) YTD 2021. Not shown: A deal in Hawaii. Source: Webb Analytics

If the current pace of dealmaking pace, we're likely this month to surpass in 2021 the number of construction supply deals that were sealed during all of last year. Equally notable, the latest transactions contain elements that open up new vistas for LBM companies.

Through Aug. 9, we have seen 66 transactions involving 32 buyers and affecting 308 facilities nationwide. In contrast, at this point last year, we had 38 transactions for 110 facilities. In addition, this year we have seen 73 greenfield openings vs. just 39 at the same point in 2020. And the number of closures has dropped to five from 20.

One of the biggest and most intriguing deals of the past four weeks involved Building Industry Partners (BIP), which created a new entity called Southeast LBM Interests that is intended to "engage people-first business practices and broad-based employee ownership to better align collective shareholder, management, and employee interests, elevate workforce prosperity, and drive enhanced organizational performance," BIP said in a July 15 news release.*

BIP announced simultaneously that it had partnered with veteran dealer Roger Farmer to acquire Warner Robins Building Supply, Henson Building Materials, and Mountain Building Supply. The companies' eight yards in Georgia and the Carolinas all were owned by the Bayer family; collectively they generate $80 million in annual sales. Farmer has been in LBM for more than 25 years, most recently as EVP of Swift Supply in Alabama and Florida.

"We'll be implementing broad-based employee ownership programs, with supporting programs designed to set in motion the virtuous cycle of investing in people," Ogden said in the news release.

SRS Distribution also is branching out, but in its case it's entering an entirely new line of business. SRS, which began as a roofing specialist and then launched a division called Heritage Landscape Supply Group, announced Aug. 6 the creation of Heritage Pool Supply Group. The group's first acquisition is Aqua-Gon, a wholesale distributor of pool and spa products with one store each in Illinois, Missouri, Wisconsin, and Minnesota.

"SRS believes the opportunity in pool and spa to be vibrant and intends to invest in a similar strategy that has been utilized to grow two national networks in the roofing and landscape supply industries by building a family of independent companies working in unison from coast to coast," SRS said in a news release. "The strategy will include acquisitions, opening new greenfield locations, and delivering best-in-class customer service and employee engagement."

Similarly, GMS is taking steps to expand beyond its core products of drywall, insulation and acoustical ceilings. On Aug. 9 it announced it had purchased two EIFS/Stucco specialty dealers: DK&B Construction Specialties of La Vista, NE, and Architectural Coatings Distributors of Cleveland. It also expanded its ceilings business in the Denver area by opening a new branch of Pioneer Materials. And it added three more branches of its traditional stores: Watson Building Materials in Scarborough, Ontario; Colonial Materials in Wilmington, DE; and Cherokee Building Materials in Jackson, MS. This will be GMS' first operation in the Magnolia State.

Other deals also saw geographic expansion. After ranging far from its Texas base last month with the purchase of a New Hampshire dealer, Nation's Best Holdings entered Arkansas for the first time and Florida for just the second time by acquiring Hipp Modern Builders Supply of Mountain View, AR, and Panhandle Lumber of Bonifay, FL.

Similarly, R.P. Lumber secured only its second and third locations ever in Iowa when it purchased Malcolm Lumber, which has facilities in Grinnell and Oskaloosa.

But some other transactions stayed close to home. Massachusetts' Arlington Coal and Lumber bought the two Friend Lumber yards in Burlington, MA, and Hudson, NH. Locals Tom Dwier and Keli Lynch purchased the Tuckerton Lumber facilities in Tuckerton and Surf City, NJ.

US LBM focused on two South Atlantic states. It purchased Massey Builders Supply of Richmond and Saluda, VA; Junior's Building Materials of Ringgold and Rossville, GA; and Buford-based North Georgia Building Supply.

Portsmouth, NH, residents learned in mid-July that local institution Ricci Lumber had been acquired by Kodiak Building Partners.

Specialty dealers kept growing. SRS Distribution made one deal that brought it three operations in the Chicago market, Acorn Roofing Supply, Prairie State Exterior Products, and 55 Building Supply. Meanwhile, ABC Supply's L&W Supply purchased DAICO Supply, a Gypsum specialist with stores in Carrollton and Fort Worth, TX. L&W opened a branch in Beltsville, MD.

There were a slew of greenfield openings, including ABC Supply in Lihue, HI, and Marcus Lumber in Storm Lake, IA. SRS' Heritage Landscape Supply Group opened new branches of Davis Supply in Tulsa, OK, and Silver Creek Supply in Middleton, ID. Sanders True Value Hardware opened in Silverthorne, CO. And Floor & Decor opened a new branch in Commack, NY.

* NOTE: Matt Ogden, BIP's Founder and Managing Partner, is a partner in Webb Analytics.

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