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No Wonder Truss and Millwork Equipment Is So Hard to Find. LBM Dealers Are Gobbling It Up

Truss plants, component facilities, and millwork operations that LBM dealers have acquired (purple pins) or opened (green) since 2018. Source: Webb Analytics research

The Building Center isn't just the name of a lumberyard in Charlotte. It's also symbolic of what a significant subset of construction supply dealers are doing these days.

On May 9, The Building Center announced it had purchased a 130,000-square-foot facility in Georgetown County, SC. This former knitting mill will become The Building Center's newest place for manufacturing roof and floor trusses, doing custom millwork, and hanging doors. It will be the company's third roof and floor truss facility. And it's not alone.

Webb Analytics' deals database lists 28 greenfield openings of truss plants or millwork operations by LBM dealers since 2018, plus another 106 facilities that have changed hands. (See map above.) Among the recent announcements were Builders Firstsource's purchase of Valley Truss, based in Boise, ID; and US LBM's acquisition of Crown Components, based in Tolleson, AZ.

On May 5, US LBM's Brand Vaughan Lumber operation announced the opening of a truss plant in Lithonia, GA. BFS's January acquisition of National Lumber landed it truss/component plants in New Bedford, MA, and Branford, CT. As for millwork, Wilson Lumber opened a new facility in Tanner, AL, in January. And Ambassador Supply bought Orgain Building Components of Clarksville, TN, in March.

From Webb Analytics' 2022 Construction Supply 150 report

It's no surprise that a lot of dealers make building materials; reports such as Webb Analytics' just-published 2022 Construction Supply 150 report show how pervasive this practice is. (Not to mention long-lasting; it typically takes at least a year these days to acquire new or used truss manufacturing equipment.) What's less well documented is how important manufacturing has become.

BFS has forecast that a quarter of its revenues will come from sales of "value-added products"--manufactured goods like trusses and its ReadyFrame series, plus windows, doors, and millwork. But it's not just the giants who are involved. When Webb Analytics asked this year's Construction Supply 150 whether any of their sales came from value-added products (VAP), 98 replied. Of those, 64 gave estimates of VAP revenues ranging from 100% to 1% of total sales, while the other 34 said the derived zero revenue from value-added goods. Most of the answers came from the bottom two-thirds of the CS150, as the 98 companies' collective revenue was only 15.6% of the CS150’s total revenue.

The 64 companies that provided estimates had $39.26 billion in revenue last year, and value-added products figured in $14.48 billion of those sales. So, for those 64 members of the CS150, value-added products provided 37% of their revenues.

The drive toward trusses, components, doors, windows, and millwork happens almost exclusively among lumber-focused LBM dealers, with rare exceptions: Lansing Building Products bought the window manufacturer and retailers Harvey Building Products, for instance, while Menards, the Midwestern big-box giant, has a truss plant. The size and style of the customer also matters: Lumberyards get a bigger share of their revenue from new home construction than do specialty dealers or home centers, and the bigger the builder customer, the more likely there is to be demand for trusses, pre-built stairs, and columns.

That concentration also means action for truss and millwork facilities isn't all that apparent when you look at the entire M&A landscape. So far this year, there have been 44 deals by 28 buyers that involved 128 facilities, plus 53 greenfield openings and 13 facility closures.

LBM facilities involved in deals (blue pins), openings (green), and closures (red) YTD 2022. Source: Webb Analytics

Among the most recent deals:

* Nation's Best Holdings purchased Sparr Building & Farm Supply, a four-unit operation in central Florida.

* Truss specialist A1 Industries opened its first satellite facility, located in Bainbridge, GA.

* Blue Ridge Lumber has confirmed it's buying Cramer's Home Building Centers, a two unit operation based in Pocono Summit and East Stroudsburg, PA.

* W.E. Aubuchon purchased Cornell's Hardware of Eastchester. NY.

* R.P. Lumber opened a new store in Mount Vernon, MO.

* Beacon Building Products bought Wichita Falls (TX) Building Supply.

* ABC Supply opened a new store in Tiffin, IA.

* ABC Supply's drywall speciality unit, L&W Supply, bought DWS Building Supply of El Paso, TX, and Las Cruces, NM.

* Waters Hardware expanded by seven stores with its purchase of the Nuts and Bolts Hardware chain based primarily in Missouri,

* Outdoor Living Supply, a relatively new startup, bought Back Yard Living of Abington, MA.

* Floor & Decor opened a new branch in Warrensville Heights, OH.

* Harry's Ace Hardware of New Orleans closed.

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